The ASX Today

The ASX is indicating it will recover some of the ground it lost yesterday, but the materials and energy sectors could prove to be headwinds again.

The ASX is indicating it will recover some of the ground it lost yesterday, but materials and energy could prove to be headwinds again.

By and large, US equities gained slightly overnight, which made up for weakness across Asian exchanges beforehand. 

Even with metals and oils lower again, ASX SPI 200 Futures traders have added 22 points to the index this morning. That's following a rather ordinary day of trade yesterday though, where the benchmark local index lost 26 points, as weakness in Asia seemed to stretch out to Australia in the afternoon.

KEY POINTS

  • International trade data released in Australia today
  • Materials exposed to gold, iron ore and copper could come under pressure again
  • Energy stocks may move on lower oil prices for OPEC nations as US oil muscles up
  • Traders may keep an eye on Asian indices this afternoon following significant weakness yesterday 
  • The Australian dollar is buying US75.65c this morning

Oil is lower after a big draw in crude inventories due to an increase in US production and gasoline stocks. US production levels are at record highs, which is hurting OPEC nations. WTI is off 2.76 per cent at $US56.03 a barrel, Brent crude is down around 2.6 per cent to $US61.25 a barrel.

In commodities, producers exposed to gold, iron ore and copper seem the ones to watch on the market today. Aluminium (-1.6 per cent) also declined for a third straight day as traders questioned the upbeat Chinese demand outlook that helped fuel this year's rally, according to CommSec. 

Gold is back at the bottom of the $US1260/$US1300 range according to technical analysis, which indicates a break of $US1260 would see a move towards $US1223 an ounce. Traders are said to be waiting the US Federal Reserve meeting next week where a rate hike is largely anticipated.  

Iron ore spot markets were down on Wednesday, extending the largest decline since September. Dalian futures in China were also down in overnight trade, so a recovery looks less likely for the local session today, at least until futures re-open at midday AEDT.

Yesterday marked the largest one-day percentage decline in benchmark 62 per cent fines since September 22 — they tumbled 3.4 per cent to $US69.36 a tonne. This is significant to strategists as it's the lower grade fines that have been declining in price in recent times, while the higher grades have been protected, as Chinese policymakers push to improve air quality and put a stop to poor-quality production.

Copper stabilised and is up a little to $US2.94 but the price had weakened significantly throughout the week already.

Market Summary: 
IndexLastPoints ( /-)Change (%)
Dow24,140.91-39.73-0.16
S&P 5002,629.27-0.30-0.01
Nasdaq6,776.3814.160.21
FTSE 1007,348.0320.530.28
DAX12,998.85-49.69-0.38

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