ASX Futures down 30 points as overseas and domestic news takes its toll

By Trevor Hoey. Published at Jul 8, 2020, in Market Wrap

It was a rollercoaster ride for the S&P/ASX 200 index (XJO) on Tuesday as it started strongly before dipping around midday, rallying mid-afternoon and then falling some 50 points in the last hour of trading.

However, the final close of 6013 points was only down marginally on the previous day, and it could be argued that this was a good result given negative sentiment that emerged in the afternoon could mainly be attributed to coronavirus news.

There is now a second wave of economic turmoil to be factored into company forecasts and the broader Australian economy, and further downside wouldn’t surprise.

Adding further fuel to the fire on Wednesday will be the poor performance of overseas markets.

The ASX SPI200 index is down 30 points to 5959 points.

24 hours

Asian markets gave up some of the previous day’s gains yesterday with the Hang Seng hardest hit as it fell 1.4% or 363 points to close at 25,975 points.

The Nikkei 225 shed 100 points or 0.4%, closing at 22,614 points.

The Shanghai Composite bucked the trend, adding to the previous day’s strong gains by another 0.4% to close at 3345 points.

The FTSE 100 started the day in negative territory and continued the downhill slide in afternoon trading, closing at 6190 points, down 1.5%.

Negative sentiment also prevailed in mainland European markets with the DAX down nearly 1% or 116 points to 12,617 points.

The CAC 40 came off 0.7% or 38 points, closing at 5043 points.

Moving to the US, the Dow was the hardest hit index, sliding 1.5% or nearly 400 points to close at 25,890 points.

The S&P 500 was down 1.1% to 3145 points.

Even the NASDAQ couldn’t save the day as it fell 0.9% or 90 points to close at 10,343 points.

It is worth noting though that earlier in the session the index made a new all-time high of 10,519 points.

Many of the negative signs appear to be re-emerging with the CBOE Volatility Index increasing from about 27.5 points to 29.5 points.

There was a flock to gold as it spiked from about US$1785 per ounce to close near its high of US$1811 per ounce.

After pushing up towards US$0.70, the Australian dollar is starting to show some weakness.

This could well be linked to the re-emergence of COVID concerns, suggesting there could be further downside to come.

This would benefit Australian mining companies - based on the current gold price and an Australian dollar of US$0.69 the prevailing Australian dollar gold price is about $2620 per ounce, representing a margin of around $1300 per ounce relative to average production costs of $1300 per ounce.

It was a fairly flat performance for the Brent Crude Oil Continuous Contract as it finished the day at US$43 per barrel.

The iron ore price continued to track north, gaining a hefty 1.7% to US$103 per tonne.

Base metals took a breather after some strong gains in recent days.

However, lead is one to watch as it broke through the US$0.81 per pound mark to hit a near four-month high.

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