Depressed consumer confidence evident in US, ASX futures trending lower

By Trevor Hoey. Published at Jul 29, 2020, in Market Wrap

The S&P/ASX 200 index (XJO) made a strong start on Tuesday pushing above 6100 points, but it was all downhill in the afternoon with the index closing at its low for the day of 6021 points.

However, early morning hype was a fairly poor indication of how the market was faring as it was mainly mining stocks, in particular those exposed to gold that were doing the heavy lifting as the precious metal hit a record high of US$1981 per ounce.

Underlining the extent of the gains being made in the sector, Northern Star (ASX:NST) and Saracen Mining (ASX:SAR) hit all-time highs, while Silver Lake Resources (ASX:SLR) and Perseus Mining (ASX:PRU) struck 12 month highs.

When gold retraced, the rest of the market went with it including recently in favour sectors such as information technology and consumer discretionary.

The gold price has remained resilient overnight, but equities markets mainly trended downwards.

While Australian CPI data is due to be released today, our market is more likely to take its lead from the US where negative sentiment prevailed.

The ASX SPI200 futures index is down 26 points to 5960 points, and given the added concerns regarding coronavirus, further downside appears likely.

24 hours

The Asia-Pacific region was mixed yesterday, mirroring the up-and-down day on the ASX.

While the Hang Seng and the Shanghai Composite gained 0.7% to close at 24,772 points and 3227 points respectively, the Nikkei 225 shed 58 points, closing at 22,657 points.

The FTSE 100 kicked off the day strongly as it briefly touched 6150 points before falling nearly 70 points to about 6080 points.

However, a late session recovery resulted in it finishing in positive territory, up 0.4% to 6129 points.

There was little movement in mainland European markets with the DAX up just three points to 12,835 points and the CAC 40 gaining 10 points to close at 4929 points.

Across-the-board negativity was the order of the day in the US as the Dow (-0.8%), the S&P 500 (-0.6%) and the NASDAQ (-1.3%) all lost ground.

Early in the day, the NASDAQ looked as though it may buck the trend, but in the last two hours of trading the index shed 120 points to close at 10,402 points.

Near-term market catalysts include pending home sales figures and the US Fed FOMC’s (Federal Open Market Committee) commentary regarding its view of the country’s financial status and the need to adopt appropriate monetary policy in the form of adjusting interest rates for example to stimulate the economy.

On the commodities front, it was gold once again that stole the show, gaining approximately 1% to finish at US$1944 per ounce.

When the Gold Continuous Contract opened an hour ago it surged 0.5% in the first 15 minutes, perhaps signalling another positive day.

The Brent Crude Oil Continuous Contract trended lower, falling from about US$44 per barrel to close at US$43.61 per barrel.

Iron ore also lost ground, coming off 1% to just shy of US$107 per tonne.

Aside from zinc, base metals generally trended lower.

However, zinc rallied another 1% to close just shy of its six-month high of approximately US$1.02 per pound.

The Australian dollar continues to hover at the mid-point between US$0.71 and US$0.72, but if negative commentary or the flagging of further supportive fiscal measures emerge from the FOMC, it is more likely that our currency will push up towards the top end of that range.

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