Our market will start with a small fall this morning after selling across global stockmarkets overnight on fears about the health of the Chinese economy.
Futures trading suggests the ASX200 will start around 10 points down after Wall Street, European and Asian markets all lost from half a per cent to 1.7% (Shanghai) in value.
Adding to the pressure here today will be yet another drop in the price of iron ore overnight – it tumbled through $US80 a tonne to its lowest price since September, 2009.
The benchmark iron ore price for immediate delivery at the port of Tianjin in China slid 2.3% to $US79.80 a tonne overnight, following a 1.6% fall to $US81.70 on Friday.
And the value of the Aussie dollar also dropped – down more than half a cent to around 88.72 US cents, a looking to go lower as those fears about China mount.
The sharp fall came after a short-lived rally a week ago which saw the price spike to $US85 a tonne. The price is down nearly 40% so far this year.
Also adding to the pressures today here will be the release of the ‘flash’ report on the health of Chinese manufacturing from HSBC/Markit.
It will tell us if the weakness in August has spilled over into September, as it seems to have done.
That will add to the existing weakness and selling pressure in all markets.
Gold was down $US2 to $US1,215 an ounce at the close in New York, while US oil prices fell back under the $US92 level and Brent crude in London was also easier.
Comex Silver fell to new four year lows, closing down 8 US cents on $US17.70 an ounce. Gold for December delivery rose $US1.30 to settle at $US1,217.90 an ounce, but then fell in after hours trading in early Asian trading.
Copper prices, a bellwether commodity for Chinese demand, fell 5 US cents a pound, a big fall, to end at $US304 a pound on Comex in New York.
The S&P 500 closed 16.11 points, or 0.8%, lower at 1,994.29. The Dow dropped 107.06 points, or 0.6%, to 17,172.68 and the Nasdaq Composite fell 52.10 points, or 1.1%, to 4,527.69.
Like Australia, Wall Street is now down for the month with the overnight fall.
With six days to go to the end of September, the S&P 500 is half a per cent under the level it started the month on.
But the falls in Australia have been much larger.
The local market fell 1.3% yesterday, after being down more than 1.5% at one stage, to take the loss in the last six trading days to 3.1% and over 5% for the month so far.
Banks, miners and assorted industrial stocks took the brunt of the investor selling (though isolated shares rose, such as Fairfax Media, which was up 3.2% to 80 cents).
The fall in global iron ore prices and worries about the health of the Chinese economy were big factors here yesterday.
The All Ordinaries Index also lost 1.3% in a sell-off and it closed on 5368.2, while the ASX 200 ended at 5,363.
But it wasn’t just Australia which sold off – other markets in Asia lost ground as well with Tokyo’s Nikkei, Hong Kong’s Hang Seng and China’s Shanghai Composite down 0.7%, 1.4% and 1.7% respectively. The South Korean market fell 0.7%, while Taiwan’s was off 1.1%.
But the New Zealand Stock Exchange went against the sell off and rose 1.1% to 5236.3 points, close to an all-time high, following the re-election of popular Prime Minister John Key and his National Party government on Saturday.
The local market is down 5.2% since hitting its 2014 high of 5658.1 points on September 2.
The index hit its low of 5070.3 points on February 5, but it is now just 10.8% above the end of 2013 level of 5352.2
The Commonwealth Bank of Australia lost 1.8% yesterday to end at $76.45, Westpac fell 2.3% to $32.40, the ANZ dropped 2.2% to $31.21, and the National Australia Bank lost 2.4% to end on $33.10.
Telstra fell 1.1% to $5.35. Woolworths lost 0.8% to end at $34.80, and Wesfarmers, owner of Coles, lost 0.7% to $42.65.
BHP Billiton dropped 1.8% to $34.86, and Rio Tinto slid 2.5% to $60.05. Iron ore exporter/steel maker Arrium jumped 4% to to 39¢, after plunging 42% last week following a huge capital raising.
Laboratory testing services provider ALS Ltd was the worst-performing stock in the ASX 200, plunging 17.2% or 17.2% to $5.77 after issuing a profit warning pointing to lower demand from clients in the resources sector.
