The ASX Today

The ASX is indicating it will drift lower at the open, lacking leads from equities overseas in light of a public holiday in the US. 

Traders of ASX SPI 200 Futures have taken 11 points, or 0.2 per cent, off the index. US markets were closed for Martin Luther King day, but there was some action elsewhere and in currencies and commodities.

With the exception of iron ore, materials prices were significantly higher overnight. Lead and aluminium led the charge in London, but bigger commodities markets also made headway too. This could be a catalyst for our heavyweight materials sector on the ASX today. 

While US markets were closed, the US dollar continued to come under heavy selling pressure. This may not bode well for US-exposed stocks on the ASX today, which more-or-less have been on a downward slide for sometime. 

Traders sold out of a range of major currencies on Monday, meanwhile, the Australian dollar managed to gain again — it's at around US79.8c respectively. Westpac currency strategists today said “indicators are now becoming stretched [for the Australian dollar], warning of potential pullbacks”. 

KEY POINTS

• Lack of strong leads as US markets were closed overnight
• Commodities could be the bright spot again on the ASX today
• Zinc hits another 10-year high, other base metals make large gains, and gold rises steadily
• December motor vehicle sales data drop in Australia
• Strategists believe Australian dollar looks overvalued as it inches towards US80c

Yesterday's ASX session seemed lacklustre considering the strong leads preceding from overseas and commodities. Our miners outperformed yesterday though, and for lack of many leads today, the sector could again be the bright spot on the ASX.

In terms of material leads, iron ore is however down 1.9 per cent to $US75.59 a tonne, and Dalian futures are flat. Copper and aluminium put in strong performances on the London Metal Exchange, adding 1.4 per cent and 0.6 per cent respectively, zinc hit another 10-year high, and spot gold added another 0.2 per cent to around $US1340 an ounce. Nickel gained 1.1 per cent and lead gained 1.5 per cent in London too. 

In Europe, the euro has reversed in the measure of around 2 per cent in the last 48 hours as traders see the currency in a better light against the US dollar. European equities held somewhat steady overnight despite the euro gaining so much.

The euro seemed to advance on the belief the European Central Bank will end asset purchases outright later this year. The date is pencilled in as September, and there's consensus of a rate hike within three-to-six months after this.

Now to Asia. Iron ore stockpiles at Chinese ports were revealed to have surged to their highest level since at least 2004, translating to weaker iron ore prices. The big news in equities overnight was that Hong Kong stocks have broken a 14-day winning streak — their longest ever — with the Hang Seng losing 0.23 per cent on Monday.