ASX 200: Will the market bounce back on Wall Street cues?

Summary

  • According to the ASX 200 futures, the benchmark index is expected to open 1.35% or 96 points higher this morning.
  • Yields on 10-year Treasuries notes turned higher on Monday, after falling to a four-month low of 1.354%.
  • The Australian and New Zealand dollars increased on Monday, taking a much-needed breather after recent losses.

On Monday, in a gloomy session, the Australian benchmark index dropped 1.81% and closed the session 133.6 points lower, at 7235.3. Today, the ASX 200 is set to rebound strongly, taking cues from Wall Street that kick-started its week with a decent gain. According to the ASX 200 futures, the benchmark index is expected to open 1.35% or 96 points higher this morning.

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On Monday, Wall Street rebounded from lower levels, and global equity markets surged from a four-week low as market participants bet on economic growth, while the US dollar retraced from Friday's 10-week high.

On Wall Street, the Dow Jones and the S&P 500 pared much of the losses seen in the previous session as investors re-positioned portfolios after last week's surprise by the US Federal Reserve regarding its hawkish shift. The Dow Jones added 1.76%, to 33,876.98, while the S&P 500 gained 1.4%, to 4,224.8. The NASDAQ Composite was up 0.81%, to 14141.49.

                     

Global Market Round Up || Here Is How Rebound In Energy, Industrial Stocks Lifted Wall Street

 

Sectors which are sensitive to the economy's fluctuations, such as energy firms and banks, recovered in Monday’s session, after they had fallen sharply since the US Fed's meeting on Wednesday when the central bank caught market participants off guard by anticipating rate hikes in 2023.

On Monday, the yields on 10-year Treasuries notes turned higher after falling to a four-month low of 1.354%. However, the benchmark note was still trading well below its last week’s high of around 1.6% after investors reacted to the Fed’s statements on rate hike.

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On Monday, the US dollar retraced from its 10-week high, made on Friday, as market participants evaluated whether a perceived hawkish stance by the Fed will mark a halt in the bear trend in the US dollar which has been in place since March 2020. The US dollar index fell 0.424%, off Friday's 10-week high of 92.408.

The Australian and the New Zealand dollars increased on Monday, taking a much-needed breather after recent losses against the US dollar, buoyed by a hawkish stance from the US Fed last week. But both currencies traded near their respective lowest level since late last year. The Australian dollar shot up by 0.76% to US$0.7532, while the New Zealand dollar was up 0.8% to US$0.6985.

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A stronger US dollar has also put pressure on cryptocurrencies, with Bitcoin falling nearly 8.9%, to US$32,241. The smaller rivals such as Ether and Dogecoin also lost 14.5% and 26.9%, respectively.  

Read More: What will Ethereum’s price be at the end of 2021

Technology shares to rise

The Australian tech space is poised to rise in today’s session, taking cues from Wall Street. The NASDAQ 100 closed 0.84% higher on Monday, depicting decent demand in technology space. Shares such as Xero Limited (ASX:XRO), Zip Co Limited (ASX:Z1P) and BrainChip Holdings Limited (ASX:BRN) could trade higher today.

Crude oil surged higher

On Monday, crude oil prices surged higher on rising demand in the northern hemisphere, driven by the summer season.

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Brent crude futures were up 1.71%, to US$74.77 a barrel, while WTI crude futures rose 2.5% to US$73.43 per barrel.

Australian energy players such as Santos Limited (ASX:STO), Woodside Petroleum Limited (ASX:WPL) and Beach Energy Limited (ASX:BPT) could be on the rise today.

Gold prices rebounded

On Monday, gold prices recovered from some losses from its biggest weekly percentage fall since March 2020. A halt in the rally of the US dollar helped yellow metal gain some ground.

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Spot gold was up 1.1% to US$1,783.29 an ounce, snapping its six-day losing streak. However, it still remained near the lowest level since early May 2021. The US gold futures gained 0.98% to US$1,781.80 per ounce.

Gold miners such as Northern Star Resources Limited (ASX:NST), De Grey Mining Limited (ASX:DEG) and St Barbara Limited (ASX:SBM) could provide some relief to investors.

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

Metals update

On Monday, iron ore futures in Asia tumbled, with losses widening after Chinese authorities initiated an investigation into the spot market as prices of iron ore remained at a higher level despite repeated warnings from the government against hoarding and speculation.

The most actively traded futures, the September month delivery contract of iron ore on China's Dalian Commodity Exchange (DCE), closed 8.8% lower at 1,121 yuan (US$173.31) per tonne.

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Copper prices steadied on Monday, slightly up from their lowest level since mid-April, as China affirms to put a leash on commodities price rallies. The benchmark copper futures on the London Metal Exchange (LME) was up 0.6% at US$9,203 after falling to US$9,011 earlier in the day.

Local miners such as Rio Tinto Limited (ASX:RIO), Fortescue Metals Group Limited (ASX:FMG) and BHP Group Limited (ASX:BHP) could be in focus today.

Read More: What is copper and what is its strategic importance?


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