Another red day is in prospect for the Australian stockmarket after the sell off here yesterday was replicated to varying degrees in European and US bourses.
In fact it was one of those rare occasions where the slide in the Aussie market was to set the predominant tone around the world in the rest of the day’s session.
Wall Street ended down around 1%, which was actually a bit better than the bigger falls in the session. There was a small kick higher in the last half hour of trading.
The overnight trading on the ASX futures market is pointing to a 60 point plus – or well over 1% – fall in the ASX 200 index after Monday’s 95 point or 1.8% slide.
European markets fell by 1.1% after most Asian markets eased, but not the major markets of Tokyo and Shanghai which both finished with gains. In fact both markets hit two and a half year highs yesterday.
Driving the sell was the increasing belief amongst investors that the US Federal Reserve will lift interest rates for the first time since 2006 at its two day meeting next month.
Gold futures ended with a small gain, unlike Friday’s big fall which triggered yesterday’s sell off here.
Oil prices were weak, but not as fraught as last week. But there are no signs of anything positive for this commodity.
And iron ore prices were flat at $US48.24 tonne in the Chinese market yesterday.
BHP Billiton shares will remain under pressure over the Brazilian dam disaster at its half-owned associate, Samarco. BHP shares hit a seven-year low yesterday, after the tailings dam it jointly operates in Brazil burst last Friday.
The shares fell 5.5% to $21.46, the lowest since November 2008. That was after a 6.4% slide last week capped by a sell off on Friday as news emerged of the tailings dam disaster.
Now some brokers say the disaster could cost BHP half a billion dollars or more to clean up and some doubt that the Samarco mine and pellet operation will come back into production because of the slide in global iron ore prices.
More than $27 billion was wiped off Australian shares in yesterday’s sell-off, helped by Friday’s weakness in commodity prices – especially gold, oil and copper. The ASX 200 fell to a month low yesterday and will go lower with the falls expected today. Australian gold stocks fell by an average of 5.3% yesterday.
