Oil prices fell, gold and iron ore jumped as trading in commodity market opened 2021 on a mixed note.
Gold starred with a 2.7% surge (more than $US51) to top $US1,945 an ounce after Wall Street started the new year at a new set of all time highs, then plunged on fears the Democrats could win both Senate seats in tomorrow’s special run off polls in the state of Georgia.
If they do take both seats from the Republicans, the Democrats will control both houses of the US Congress, allowing the incoming Biden administration more freedom to introduce its election agenda which investors fear will include higher taxes and a crack down on Wall Street activity and companies.
Gold rose because US equity investors jumped at shadows and Donald Trump’s latest outrage in trying to get an official to recast the popular presidential vote in Georgia at the weekend.
There is now a growing fear Donald Trump will take US democracy to the brink in his efforts to remain in power.
Wall Street’s sell off saw the ASX 200 futures market lose 27 points by 8 am, pointing to a fall at the opening from 10am Tuesday. While the rise in gold and iron ore prices will provide some solace for those sectors, the size and nature of the sell off on Wall Street will make local investors wary until the results in Georgia become clearer later in the week.
(There are more than 3.1 million pre-poll and postal votes to be counted in Georgia as well as voted to be cast on the day. That will make for a long count, with recounts certain, given the experience in the November 3 poll).
That saw the US dollar make some ground against the Aussie currency – it was trading at 76.65 US cents in early Asian dealings on Tuesday, nearly a cent lower than the highs hit over the break in offshore dealings.
Copper followed gold higher, jumping to $US3.56 a pound, a rise of more than 1.3% and resuming the solid 25% rebound the metal enjoyed in 2020.
Iron ore prices also rose – the price of 62% Fe fines delivered to northern China ended at $US165.29, up $US4.82, a rise of 3% on the day. Yje price of 65% fines delivered from Brazil also rose sharply – up $US7.80 a tonne to $US181.50.
Oil followed the lead from equities – starting the year at multi-month highs only to tip over and fall, ending more than 1% lower on the day.
Oil wasn’t helped by news that the OPEC+ group had failed to decide whether to increase output in February and agreed to meet again on Tuesday.
Brent futures settled 71 cents, or 1.4%, lower at $US51.09 a barrel, while US West Texas Intermediate (WTI) crude fell 90 cents, or 1.9%, to settle at $US47.6
That was after WTI hit its highest since February and Brent its highest since March. The premium of Brent over WTI reached its highest since May.
The Dow fell 382.59 points, or 1.25%, to 30,223.89, the S&P 500 lost 55.42 points, or 1.48%, to end at 3,700.65 and the Nasdaq shed 189.84points, or 1.47%, to 12,698.45.
The falls on the day were around half the size of the early plunge of 2.5% or more across the markets.
