ASX futures flat, gold makes another record high, overseas markets mixed

After a horror day on Friday when the S&P/ASX 200 index (XJO) fell 2% (123 points) to close at 5928 points, there are no clear indicators that point to a recovery on Monday.

On the domestic front, coronavirus is tightening its grip on Victoria with the declaration of a state of disaster and stage 4 restrictions in Melbourne having a marked detrimental impact on businesses.

With further cases being detected in Sydney, investors are more likely to be taking money off the table than looking to take advantage of rampant selling on Friday.

Overseas markets were mixed, suggesting little support from international dynamics.

The ASX SPI200 index is down one point to 5877 points, indicating we could be in for a subdued start to the week.

24 hours

Looking at other markets on Friday, Japan was hit harder than Australia with the Nikkei 225 plunging 2.8% or 629 points to close at 21,710 points, a level it hasn’t traded at since mid-June.

The Shanghai Composite bucked the trend gaining 0.7% or 23 points to close at 3310 points.

However, the Hang Seng didn’t escape the negative sentiment as it came off 115 points, closing at 24,595 points.

European markets were also particularly gloomy with the FTSE 100 dropping 92 points or 1.5% to close at 5897 points.

Germany wasn’t as dour with the DAX coming off 0.5% as it closed at 12,313 points.

The CAC 40 moved broadly in line with UK markets as it shed 69 points or 1.4% to close at 4783 points.

While negative sentiment prevailed in the US for most of the session, the trend changed in afternoon trading as the Dow put on 400 points in the last few hours to close up 114 points or 0.4% at 26,428 points.

Though the NASDAQ opened strongly, it didn’t take long to trend downwards before mirroring the Dow’s surge over the last two hours of trading as it gained approximately 200 points to close at 10,745 points, up 1.5% on the day.

Amid the mayhem and extreme uncertainty, gold continues to be the shining light, making another all-time high as it broke through US$2000 per ounce before closing at US$1985 per ounce.

Australian investors would have been watching our currency movements against the US dollar just as closely as this has a significant impact on revenue generated by Australian mines.

There was a substantial decline from more than US$0.72 to US$0.714, and this translates to an Australian dollar gold price of $2780 per ounce.

Elsewhere on the commodities front, the Brent Crude Oil Continuous Contract rallied late in the day, increasing from US$43 per barrel to close at US$43.52 per barrel.

Aside from copper and zinc there was little movement in base metals with the former continuing to trend downwards as it fell just below US$2.90 per pound after it looked like the red metal was poised to break through US$3.00 per pound a fortnight ago.

Zinc is the one to watch as it appears to have snuck under the radar, not just making a six-month high this week but going on to hit US$1.04 per pound.

In approximate terms, US$1.10 per pound is around the mid-point of where the metal has traded over the last five years, and a break above this level could be seen as significant, particularly given that it would be close to a 12 month high.