- The ASX 200 is set to open 1% higher as Wall Street indices close on record highs.
- In the currency market, the US dollar and Japanese Yen eased on Friday as investors favoured riskier currencies.
- The iron ore futures in China traded lower, logging its fourth consecutive weekly fall, as concerns over steel output controls suppressed demand for steelmaking ingredients.
On the first day of the week, the ASX 200 is set to open 1% higher, as Wall Street indices registered record closing highs, while an uptick in oil prices is expected to support energy stocks in today’s session.
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On Friday, US Treasury yields extended their rally while the three major US stock indices rallied to record closing highs, as investors relaxed a bit from worrying of a decelerating pace of economic recovery from the coronavirus pandemic that dominated trading activity for much of the last week.
On Wall Street, stocks gained upside momentum as financials and other economically focused sectors recovered from the sell-off triggered by growth worries earlier in the week. The Dow Jones gained 1.3%, to 34,870.16, while the broader market index, the S&P 500, was up 1.13%, to 4,369.55. The tech-focused NASDAQ Composite surged 0.98%, to 14,701.92.
Concerns about a slowing pace of economic recovery, had reduced investors' risk appetite early in the last week and prompted a bond-buying spree.
This action had taken 10-year US government bond yields to a 4-1/2 month low on Thursday. According to data released on Friday, investors were aggressively cutting down their short bond positions through 6 July 2021, which also weighed on yields. Still, the yield on 10-year Treasury notes ticked up 7.7 basis points to 1.365% on Friday.
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In the currency market, the US dollar and Japanese Yen eased on Friday, as investors favoured riskier currencies, as the rally in US Treasuries is running out of steam with global stock markets showing strong momentum. As a result, the dollar index fell 0.252% to 92.131.
On Friday, the Australian and New Zealand dollars slid to lower levels as risk aversion swept through global equity markets, while Sydney tightened its COVID-19 lockdown as a surge of the Delta variant threatened to go out of control.
The Aussie dollar fell to US$0.7412, having shed 1.5% for the week. It touched a seven-month low on Friday of US$0.7410, after penetrating the major support level of US$0.7445, opening the way for further decline.
The kiwi dollar also fell to US$0.6925, losing 1.2% for the week. It touched the June 2021 low of US$0.6923.
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After Thursday’s sell-off in IT shares, the closing of the last week had seen a sharp recovery, with NASDAQ 100 recovering closer towards record highs. Today, the Australian tech shares such as Afterpay Limited (ASX:APT), BrainChip Holdings Limited (ASX:BRN) and Zip Co Limited (ASX:Z1P) could also show some recovery.
On Friday, crude oil prices ticked up for a second consecutive day as commodity traders increased their positions, reacting to falling US inventories. The signs of strong Asian demand from both India and China added support.
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On Friday, gold prices inched up towards their best week in seven, underpinned by a weaker US dollar and concerns over the outbreak of the Delta variant of the coronavirus, which could hamper the global economic recovery.
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Spot gold rose 0.5% to US$1,810.99 an ounce by 2:44 PM (1844 GMT) and closed the week with a 1.4% gain. The US gold futures closed 0.6% higher at US$1,810.6 an ounce.
On Friday, the benchmark iron ore futures in China traded lower and logged their fourth consecutive weekly fall, as concerns over steel output controls suppressed demand for steelmaking ingredients.
The most actively traded iron ore futures contract for the September month delivery on the Dalian Commodity Exchange (DCE) closed 3.7% down on Friday, at 1,163 yuan (US$179.25) per tonne. It was down 1.6% for the week.
Nickel prices hit their highest level in four months on Friday, on the back of strong seasonal demand. Copper and other industrial metals also gained on the last day of the week after the highest commodities consumer; China announced that it would reduce the amount of cash holdings with the banks as reserves to boost economic recovery.
On Friday, LME copper gained 2.1% to US$9,514 per tonne, while aluminium climbed 2.3% to US$2,498.50.