Europe up, US down, gold plunges, AUD tumbles, ASX futures in the red

By Trevor Hoey. Published at Sep 24, 2020, in Market Wrap

The S&P/ASX 200 index (XJO) soared 140 points on Wednesday to close at 5924 points, one of its best one-day gains in 2020.

While all sectors finished in the black, healthcare and consumer discretionary stocks were very much in favour, rallying more than 3%.

The banks staged a recovery with the financials index up 2.2%.

However, it looks like being a different story today with the ASX SPI200 futures index down 55 points to 5850 points, reflecting extreme volatility in US markets.

The decline in the US market appeared to stem from Fed Reserve commentary regarding the ongoing need for fiscal stimulus as coronavirus continues to undermine the economy.

There were across-the-board losses, but Tesla was particularly hard hit plunging approximately 10% from the previous day’s close of about US$425 per share to close at US$380 per share.

Looking across the indices, the NASDAQ was hardest hit, plunging 300 points or 2.7% to close at 10,664 points.

The S&P 500 only fared slightly better, dropping 2.4% to 3236 points.

The Dow plunged 525 points or nearly 2% to close at 26,763 points.

These movements were in stark contrast to the mood in Europe where the FTSE 100 gained 70 points or 1.2% to close at 5900 points.

The markets were buoyed by news of employment support packages in the face of stricter coronavirus measures.

While mainland European markets weren’t as strong, the Stoxx 600 gained 0.5% to close at 360 points.

The Paris CAC 40 broadly mirrored this gain as it rallied 29 points to close at 4802 points, clawing back some of the lost ground from heavy selling on Monday and Tuesday.

The DAX climbed nearly 50 points to close at 12,643 points.

On the commodities front, there was a steep drop in iron ore as it retraced to less than US$114 per tonne.

Gold was also weak, plunging through the US$1900 per ounce barrier to close at US$1868 per ounce, representing a decline of more than US$40 per ounce.

There was little movement in the Brent Crude Oil Continuous Contract, and it appears to have stabilised in a range between US$41 per barrel and US$42 per barrel.

Base metals were hammered overnight with copper closing at US$3.02 per pound, down nearly 3% since recently breaking through the US$3.10 per pound mark.

Nickel recorded its fifth consecutive day of losses to close at US$6.51 per pound, taking it back to mid-August levels.

Zinc continued its downward trend to finish at US$1.09 per pound.

Lead was steady, sitting just below US$0.84 per pound, well shy of the six-month high of about US$0.90 per pound struck in August.

The Australian dollar has declined substantially this week as many analysts are forecasting fiscal stimulus measures, a development that traditionally weakens our currency.

It has now declined from more than US$0.73 at the start of the week to less than US$0.71.

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