Iron Ore Hits The Skids
The optimists have the ASX 200 up around 20 points in overnight trading, as they ignored a 4% plus slide in iron ore prices and focused on small rises in Wall Street stocks.
The higher start if sustained, will reverse the 25 point fall in the index in Wednesday’s session in the wake if a sell-off in commodities, led by a 4% plus slide in copper prices.
Wall Street ended weaker on he Dow (down 0.16%), all but flat for the S&P 500, and with a small 14 point gain for the Nasdaq (up 0.2%). The weakness gradually extended late in the session as the 2% slide in oil prices impacted sentiment.
Copper’s slump halted overnight Wednesday and the metal edged a touch high in New York.
The Aussie dollar though continued to weaken, trading around 75.65 this morning in he wake of yesterday’s weaker than expected.
Investors overnight also ignored a 2% fall on the Tokyo Stock Exchange for the Nikkei - the largest for 8 months. That weakness should be watched again today.
Markets in China (down 0.3%) and Hong Kong (down a large 2.1%) also fell (the Australian loss yesterday should be seen as part of that trend as well as a reaction to the weak GDP report).
But it will be the reaction to the 4.4% in iron ore prices overnight, plus futures trading today that will hit trading sentiment during the day, especially if futures prices sell off during the day.
Iron ore prices fell below $US70 per tonne on Wednesday after China’s steel and futures markets weakened during the day.
The Metal Bulletin’s 62% Fe Iron Ore Index price fell $US2.41 a tonne to $69.36 a tonne. Major miners fell on Wednesday after the rise the night before - trading lower.
That saw BHP fall 2% to $27.20, while Rio Tinto, was down 2.5% at $68.83, South32, down 4.1% at $3.24 and Newcrest Mining, lost 1.6% at $22.88. Fortescue shares fell 1.6% to $4.575.
In New York Comex February gold rose by $US1.20, or less than 0.2%, to settle at $US1,266.10 an ounce, after Tuesday’s four month low.
Comex March silver fell 0.7% to $US15.956 an ounce, while March copper added 0.5% to $US2.962 a pound.
In New York West Texas Intermediate crude futures for January delivery fell $1.66, or 2.9%, to close at $US55.96 a barrel.
That was despite news from the US Energy Information Administration that domestic crude supplies fell 5.6 million barrels last week.
In Europe, Brent oil for February gave up 73 cents, or 1.2%, to $US62.13 a barrel.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.