Not content with dealing with a slide triggered by the very strong US jobs report for February, local investors will have to take account of a new record low for iron ore on Friday night when trading resumes on the ASX this morning.
The overnight futures market has the ASX 200 ready to drop more than 60 points this morning – and there will be extra pressure from the 1.9% fall in the spot iron ore price in China to a record low of $US58.20 a tonne overnight Friday.
Also not helping sentiment will be another fall in oil prices – down for a third successive week, while spot gold prices fell to their lowest level since last November on Friday night as the US dollar rose on the strong jobs report for last month.
Copper prices also fell as well in a gloomy end to the week for key commodities.
Iron ore’s fall Friday night followed the nasty 4.5% plunge on Thursday night which helped send the market lower on Friday ahead of the US jobs report which showed 295,000 new jobs were created last month, with the jobless rate dropping to 5.5%, from 5.7%.
Data out yesterday showed China imported 67.94 million tonnes of iron ore in February, down 13.5% from January’s 78.5 million tones, but up 11% on February, 2014.
Wall Street fell more than 1.5% because the market now sees the first US rate rise happening mid year – July or August being the big tips at the moment.
After almost halving last year, the price of iron ore is now down more than 20% so far in 2015.
Friday’s spot iron ore price was the lowest price since November 2008 when index-based pricing system started.
The spot price topped $US100 for the first time in November 2009 and on February 16, 2011 and reached an all-time high of $US191.90 a tonne, thanks to cyclones in WA and heavy rains in Brazil which restricted supplies of the mineral as Chinese mills, desperate for supplies, bid up the price.
It’s been downhill all the way since then, despite occasional upturns along the way – in late 2013 and early 2014 when the price bounced back above $US130 a tonne.
Iron ore prices have slid this time because of weak demand from Chinese mills after the Lunar New Year break last month and in reaction to the reduction in China’s official growth target this year to around 7% (from the actual 7.4% rate achieved in 2014).
Expectations of weaker Chinese demand and a rise in the value of the US dollar also helped knock world oil prices lower for a third week last week after they notched up falls on Friday.
Talk of a US rate rise mid-year hit confidence in the oil market, despite another fall of 75 in the number of rigs working in the country’s oil fields.
That was double the previous week’s 37 fall, but still under recent weekly totals of more than 80.
US crude-oil futures fell more than 2% on Friday in New York.
April Brent crude in London settled down US75c, or 1.2%, – to settle at $US59.73 a barrel, down a larger 4.6% for the week.
And Comex gold and silver futures fell in New York as the US dollar rose strongly in the wake of that jobs report.
Comex April futures gold dropped $US31.90, or 2.7%, to settle at $US1,164.30, taking the loss for the week to 4%.
The settlement was the lowest since November 13, according to US data.
Comex May silver futures lost 35.1 USc, or 2.2%, to end at $US15.807 an ounce. That left the futures price down 4.5% for the week.
And Comex May copper futures fell 1.6%, to $US2.609 a pound in New York on Friday, to be down 3.1% for the week.
