Another nasty fall in commodity prices overnight for local investors to contend with today – the $1.1 billion innovation package from the Federal Government will be drowned out by new seven year lows for oil, falls for gold, copper, silver and most rural commodities.
And iron ore prices fell further, with the Steel index price under $US39 a tonne.
The fall to $US38.90 a tonne, down 1.3% from Friday’s close of $US39.40 a tonne, will again hit the prices of BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue (FMG).
The weakening oil prices helped drag Wall Street lower across the board after markets in Europe had had a mixed trading day. The Dow, the S&P 500 and Nasdaq all lost between 0.6% and just over 0.7%. The oil sector lost 3% on the day.
Helping under-mine commodity prices was consistent selling and the rise in the value of the US dollar – that saw the Aussie dollar fall back well under 73 US cents to trade around 72.65 this morning in early Asian dealings.
Our market will start with a small loss of 10 to 15 points, according to the overnight futures trading for the ASX 200.
US oil futures fell further overnight Monday to mark lowest Nymex settlements in nearly 7 years, as the lack of any agreement by OPEC roiled undermined traders’ beliefs that something will be done to tackle the surging over supply.
OPEC did nothing and there are no signs of anyone else cutting back, so down prices went.
January West Texas Intermediate crude lost $US2.32, or 5.8%, to settle at $US7.65 a barrel on the New York Mercantile Exchange Nymex. That was the largest one-day percentage drop since September.
In London, January Brent crude fell $US2.27, or 5.3%, to end at $40.73 a barrel, and could join US crude under $US40 a barrel this week.
WTI and Brent prices each lost about 4.2% last week and haven’t settled at levels this low since the depths of the GFC in February, 2009. It was a similar story for Comex gold – the front contract (February) lost $US8.50, or 0.8%, at $1,075.60 an ounce, and then fell further in electronic trading to around $US1,071 in early Asian trading.
Gone was the confidence from last Friday which saw gold surge to cap the first weekly advance in six weeks.
Comex March silver lost 10.3 cents, or 0.7%, to $US4.425 an ounce and March copper dropped 2.5 cents, or 1.2%, to $US.055 a pound.
In Europe, the Stoxx Europe 600 rose 0.5% to close at 372.48, rebounding from its biggest weekly loss in more than three months. Germany’s DAX 30 index was up 1.3% to 10,886.09 and France’s CAC 40 index was also higher, rising 0.9% to 4,756.41, but the commodity-heavy FTSE 100 index in London fell 0.2% to 6,223.52.
Asian markets closed mixed as well – in Australia the expected early surge happened with the ASX 200 jumping 1.5%, only to see it sag, then fade in afternoon trading. The index ended up just four points at 5155.7.
The sell-off was carried by weakening oil stocks, reacting to further falls in the futures market. They will continue the losses again today.
Woodside Petroleum (WPL) fell 3.7% to $28, Origin Energy (ORG) fell 5.5% to $5.12 and Oil Search (OSH) lost 5.4% to $7.52. Santos (STO) was crunched with the shares falling 9.9% to $3.81.
