Futures up 60 points, overseas markets recover, but is it a dead cat bounce?
Published 23-SEP-2020 09:13 A.M.
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
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.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (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 and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.