There’s a much better day ahead for ASX investors on Tuesday.
Shares in Europe and the US leapt on the first day of the new quarter, ignoring the negative leads from Australia and Hong Kong after the UK government watered down its controversial tax cuts.
Bond yields eased as the sense of fear eased in markets after last week’s stepped-up volatility after the pound fell to a record low against the US dollar and other currencies slumped as well.
The greenback eased and other currencies rose, taking pressure off commodities like gold and oil, but not copper.
That saw other currencies rise and the Aussie regain the 65 US cent level and trade around 65.15 in Asian dealings just after 7am.
US Treasury yields eased to around 3.65% on Monday, from decade-high levels last Thursday and Friday close to 4% for the 10 year bond.
The improved sentiment saw the Dow surge 764.52 points, or 2.7% to close at 29,490.03. The S&P 500 rose 2.6% to 3,678.43, after falling Friday to its lowest level since November 2020. The Nasdaq was up 2.3% to end at 10,815.44.
The ASX 200 futures market jumped more than 100 points for a strong opening to trading on the second day of the quarter after fading Monday to a small loss of 17 points.
With China closed for the National Day holiday, the Hong Kong market weakened, touching levels in trading not see for 11 years.
The Truss government in the UK dropped its contentious 45p tax cut for high income earners at the Conservative Party’s annual conference, a move that helped steady reassure nervous investors. That left the FTSE 100 up just 0.22% which was better than another large fall.
The pound though topped $US1.13 for the first time in a couple of weeks as more confidence returned and the Bank of England continued to buy long dated bonds to support the currency.
All this helped Wall Street bounce after a rough September which saw the Dow and S&P 500 notch their biggest monthly losses since March, 2020. The Dow on Friday also closed below 29,000 for the first time since November 2020.
The Dow shed 8.8% in September, while the S&P 500 and Nasdaq Composite lost 9.3% and 10.5%, respectively.
For the quarter, the Dow fell 6.6% to notch a three-quarter losing streak for the first time since the third quarter of 2015. Both the S&P and Nasdaq Composite fell 5.2% and 4.1%, respectively, to finish their third consecutive negative quarter.
US oil was up more than 4% to $US83.20 ahead of the OPEC+ meeting on Wednesday that is tipped to cut the group’s global production target by more than a million barrels a day, which would not be an actual cut but bring the target back closer to what the group has been actually producing in recent months.
Comex gold rose more than 2% or $US36 an ounce to regain and then top the $US1,700 an ounce level. Gold was around $US1,708 an ounce in early Asian dealings which will lift ASX listed miners today.
Comex copper however could only find a tiny 0.12% lift in prices to around $US3.416 a pound.
