Wall Street bounced back on Tuesday thanks to a single stock – Amazon – and the ASX will follow suit on Wednesday with a 60 plus point gain penciled in for the start.
Amazon shares rose 5.7% and Microsoft shares ended up 2.4% to drag the market higher in an unconvincing rebound from the sell-off on Friday and Monday.
But unnoticed in all of this has been another fall for global iron ore prices despite the looming long Chinese holiday around the October 1 national day which should be seeing steel mills stocking up.
Usually, steel mills boost their stocks ahead of the 8-day holiday but this year their purchases have been restrained by tightening profit margins on steel products.
Instead, they don’t seem to be all that interested and prices have now tumbled 10% from the near seven-year high set a week ago Tuesday of $US130.17 for 62% Fe delivered to northern China.
The Metal Bulletin Index price settled at $US117.30 on Tuesday, down $US2.52 a tonne, and the lowest price for more than a month.
The weakness in iron ore prices has already knocked the share price so the big three – BHP, Rio, and Fortescue – lower this week.
Tuesday saw BHP shares lose 1.8% to $36.67, Rio Tinto drop 2.4% to $97, and Fortescue Metals lose 2% to $15.87 and a new two month low.
While the fall in prices will be noticed today, the euphoria of a rebound from four days of falls will dominate and yet the fall in iron ore prices comes at a difficult time for the local market.
Iron ore and gold prices have been holding up Australia’s trade performance and both are now under pressure. Gold prices fell again in New York.
But it’s the rebound on Wall Street and the 63 points (around 7 am) gain in the ASX 24 futures market that will dominate the start today.
The Dow rose 140.48 points, or 0.5%, to close at 27,288.18, after hitting a midday low of 26,989.93. The S&P 500 was up 34.51 points, or 1.1%, and finished at 3,315.57.
The Nasdaq jumped 184.84 points, or 1.7%, to 10,963.64.
The S&P 500 and Nasdaq both ended four-day losing streaks, while the Dow snapped a three-day string of declines.
Oil prices edged up – In New York, West Texas Intermediate crude for October delivery rose up by 29 cents, or 0.7%, to settle at $US39.60 a barrel after Monday’s 4.3% fall.
The contract expired at the day’s settlement. The November WTI contract settled at $US39.80, up 26 cents, or 0.7%.
In Europe, November Brent crude ended up 28 cents, or 0.7%, at $US41.72 a barrel.
Comex December gold lost $US3, or 0.2%, to settle at $US1,907.60 an ounce, following a 2.6% slump Monday. Tuesday’s settlement was the lowest for the most-active contract since July 24.
Comex December silver though was up 14 cents, or 0.6%, at $US24.523 an ounce, following Monday’s 10.1% tumble.
And Comex December copper also rose, up 1% to $US3.061 a pound.
