Futures up 60 points, overseas markets recover, but is it a dead cat bounce?

By Trevor Hoey. Published at Sep 23, 2020, in Market Wrap

The S&P/ASX 200 index (XJO) had its worst close since mid-June on Tuesday, finishing at 5784 points, down 38 points on the day.

Volatility in overseas equities markets was always going to wreak havoc with our financial sector which is a significant swing factor in the broader index performance.

Exacerbating the negative trends felt in that sector were falls of about 2% across the Materials and Energy indices, triggered by commodity price weakness across iron ore, gold and oil.

While oil has stabilised, iron ore took another hit overnight, gold fell further and there were across the board declines in base metals, suggesting mining stocks could receive another hit today.

However, with overseas markets recovering overnight, and particularly good gains made in the US, the ASX SPI200 index is up 60 points to 5831 points.

Given the increasingly dire coronavirus situation in the UK, reflected in only a moderate recovery in European markets, it could be argued that the quantum of our rebound indicated by the futures index is a little too optimistic, particularly if the big miners place a drag on the index.

The Stoxx 600 arguably gives a better indication of sentiment in the European region, rather than looking at a handful of individual indices.

It was up 0.2% to 357 points overnight, but in France the CAC 40 underperformed the broader region, shedding 19 points to close at 4772 points.

The DAX was one of the stronger performing indices, gaining 0.4% or 52 points to close at 12,594 points.

While the FTSE 100’s gain of 25 points or 0.4% was robust in the circumstances, looking at the bigger picture, the index has lost 200 points since Friday.

It is a similar story in the US with the Dow’s gain of 140 points hardly representing a material recovery in the context of the previous day’s fall of 510 points.

The S&P 500’s gain of 34 points or 1% inspired a little more confidence, but once again it was the NASDAQ that stood strong.

Having given little ground on Monday, the NASDAQ soared 184 points or 1.7% to close at 10,963 points.

On the commodities front, gold briefly slipped below US$1900 per ounce before closing at US$1907 per ounce.

Iron ore continued its steep decline, falling more than 2% to approximately US$117 per tonne.

After pushing up above US$42.00 per barrel, the Brent Crude Oil Continuous Contract tapered off later in the day to close at a respectable US$41.72 per barrel.

All base metals trended lower with zinc one of the hardest hit as it fell by about 3% to US$1.10 per pound.

Nickel was also weak, recording its fourth consecutive day of losses to close at US$6.58 per pound, a level it hasn’t traded at since mid-August.

The Australian dollar continued its slide against the US dollar, plateauing at around US$0.716, down 2.2% since Monday.

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!