If the futures market is of any guide, the ASX is facing a nice little rise this morning that might go someway to partially offsetting yesterday’s sell off, thanks to the slide in the big banks as investor fears about rising bad debts grabbed centre stage.
The ASX lost 1.6% to 5004.5 yesterday, after briefly dipping below the 5000-level, while the All Ordinaries shed 1.5% to 5076.2.
The big question for today in the local markets will be if those fears about bad bank debts (which wiped around $30 billion from the value of the big banks in the past week) will fade in the face of optimism about the path of US interest rates (which is again boosting the dollar).
That 30 point gain on the futures market could be a bit misleading if investors continue fretting about the bank bad debt position and the impact of the rising dollar on local exporters and the wider economy.
Overnight the ASX 200 future market saw a 30 point gain, thanks to comments from US Federal Reserve chair, Janet Yellen, which made it clear the central bank won’t be rushing to lift interest rates anytime soon.
That saw most markets in the US reverse course (although oil continued to weaken and ended lower, but gold bounced nicely).
US shares reversed early losses, and finished in positive territory Ms Yellen comments that policy makers would take a cautious approach to raising interest rates.
The S&P 500 jumped 17.99 points, or 0.9%, to 2,055.03. The Dow added 98.27 points, or 0.6%, to 17,633.66, and Nasdaq did the best, rising 79.84 points, or 1.7%, to 4,846.62 – thanks to strong gains among tech stocks.
The US dollar sold off and the Aussie dollar jumped a cent overnight to trade around 76.40 in early Asian trading this morning.
As a result, Comex gold futures ended a three-session losing streak to closer higher.
June gold rose a solid $US15.50, or 1.3%, to settle at $US1,237.50 an ounce, May silver added 4 cents, or 0.3%, to settle at $1US5.23 an ounce, but Comex May copper futures fell 3 cents, or 1.4%, to close at $US2.21 a pound.
Despite the weaker greenback, oil futures fell for a fifth straight session to finish at their lowest level in two weeks.
West Texas intermediate crude for May fell $US1.11, or 2.8%, to settle at $US38.28 in New York. That was the lowest settlement since March 15. In London, May Brent crude fell $US1.13, or 2.8%, to $US39.14 a barrel. Analysts pointed out that oil prices had been much lower earlier in the session, but cut their losses in the wake of Ms Yellen’s speech and as the greenback fell.
But the negative feeling was too hard to shake as the market awaits updates on US oil stocks and production tonight and tomorrow night.
Adding to the mix of negatives for local investors today was another fall in the price of iron ore, down 1.2% to $US55.11 a tonne.
