ASX 200 to open lower as Wall Street tumbles

Summary

  • The ASX 200 is set to open 0.6% or roughly 46 points lower on the last day of the week.
  • The US government bonds yields continued to tumble, with 10-year Treasury yields declining to their lowest levels in nearly five months.
  • Gold prices eased on Thursday as Wall Street recouped some losses from the lows and US Treasury yields edged lower.

On Friday, the ASX 200 is set to open 0.6% or roughly 46 points lower, on the backdrop of a weaker Wall Street closing. Also, the country’s most populous state New South Wales reported its highest daily rise in local coronavirus cases this year, fueling concern regarding an extension to restrictions.       

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US equity markets traded lower on Thursday, reverting from record closing in a broad sell-off driven by uncertainties surrounding the pace of the US economic recovery. Also, bond prices firmed further towards a new 52-week high as investors trimmed risk and fled to safety. Although markets had rebounded from their extreme lows, made early in the trading session, but still closed meaningfully lower.

Read More: ASX ends 0.2% higher; Zip, Nuix lead

Worries about Beijing's crackdown on foreign-listed Chinese firms also put a halt on the equities’ rally. At the closing, the Dow Jones was down 0.75%, to 34,421.94, while the broader S&P 500 index lost 0.86% to 4,320.83. The tech-focused NASDAQ Composite fell 0.72%, to 14,559.79.

Meanwhile, new data on Thursday on the filing of new unemployment claims by Americans depicted that the jobs market recovery from the coronavirus pandemic continues to be choppy.

The US government bonds yields continued to tumble, with 10-year Treasury yields declining to their lowest levels in nearly five months as investors' worries persist that the highest pace of the economic recovery may now be over. The yield on 10-year Treasury notes fell 3.5 basis points to 1.286%.

On Thursday, the US Treasury yield curve, measuring the gap between yields on two- and 10-year Treasury notes, was at 108.9 basis points after flattening to as small as 104.2, the most narrowed curve since 12 Feb 2021.

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The US dollar also fell on Thursday, retracing from a three-month high. The dollar index was down 0.297% at 92.493.

On Thursday, the Australian and New Zealand dollars traded lower as a bout of global risk aversion lowered bond yields and triggered a sell-off in equities. Also, a further lockdown in Sydney challenged the domestic economic outlook.

                   

Global Market Roundup || Why did Wall Street stocks retreat but Asia-Pacific shares slide?

 

The Aussie dollar fell 0.3% to US$0.7462 and was off by a decent margin from the week's top of US$0.7599. It is now trading near the seven-month low of US$0.7445, a fall below which would risk a much deeper slide.

In the cryptocurrency market, Bitcoin fell to the lowest level since 28 June 2021 and is currently trading 3.14% down, at US$32,809. Other popular cryptos such as Ether and Dogecoin are also down 7.94% and 6.37%, respectively.

Technology shares

The ongoing Chinese tech-rout and a weaker closing of the NASDAQ 100 in the US are pointing towards a softer opening of technology shares on the ASX. As a result, shares such as BrainChip Holdings Limited (ASX:BRN), Afterpay Limited (ASX:APT) and Xero Limited (ASX:XRO) could trade lower in today’s session.

Read More: Which are the top tech penny stocks for Q3 CY21?

Crude oil

Crude oil prices ticked up on Thursday, rebounding from losses in the early session after US government data revealed that crude and gasoline inventories fell more than expected.

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Brent crude oil futures rose 0.9%, to settle at US$74.12 per barrel, while US West Texas Intermediate futures were up 1%, at US$72.94 per barrel.

Energy players such as Origin Energy Limited (ASX:ORG), Viva Energy Group Limited (ASX:VEA) and Oil Search Limited (ASX:OSH) could see investors’ interest today.

Gold

Gold prices eased on Thursday as Wall Street recouped some losses from the lows and US Treasury yields edged lower. However, a weaker US dollar and concerns over a US jobs market recovery kept the yellow metal near a three-week peak.

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Spot gold fell 0.2% to US$1,799.18 an ounce by 2:12 PM EDT. The US gold futures closed 0.1% lower at US$1,800.20.

Australian gold miners such as De Grey Mining Limited (ASX:DEG), Silver Lake Resources Limited (ASX:SLR) and Newcrest Mining Limited (ASX:NCM) could trade with a slight bearish bias.

Read More: Three ASX gold stocks to light up your portfolio as gold prices heat up

Metals update

On Thursday, Chinese coke and coking coal futures fell to a one-month low, and iron ore prices fell as much as 3.6% as steel production cuts at some mills raised concerns over sustained demand for the steelmaking ingredients. Benchmark iron ore futures on the Dalian bourse closed the session 2.9% lower, at 1,188 yuan a tonne.

On Thursday, copper prices slid after the US Fed confirmed its plans to tighten monetary policy sooner than expected. The benchmark three-month copper on the London Metal Exchange (LME) traded 1.3% lower, at US$9,334 by 1605 GMT.

Local miners such as BHP Group Limited (ASX:BHP), Fortescue Metals Group Limited (ASX:FMG) and Rio Tinto Limited (ASX:RIO) may shed some gains from the Thursday’s session.

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