Futures down 15 points as overseas markets continue to fall

By Trevor Hoey. Published at Oct 15, 2020, in Market Wrap

The index (XJO) came off 17 points on Wednesday to close at 6179 points, a decline of 0.3%.

In line with overseas markets, it was predominantly travel and financial stocks that led the market lower.

Strong performances from some tech and healthcare stocks helped to offset this downward pressure.

However, it could be a different story today because it was consumer discretionary stocks that felt the pinch overnight in the US with prominent casualties being Walmart Inc, Nike Inc and Home Depot, while services companies such as Honeywell International and Inc and Caterpillar Inc made good gains and Boeing recovered some of the previous day’s losses.

The ASX SPI200 index is down 15 points to 6146 points, but this could be a little optimistic with real concerns surrounding an acceleration of COVID cases in Europe, combined with a lack of intent by the US government to instigate an interim stimulus package placing a significant drag on equities markets.

Similar issues will come to the fore today in Australia with monetary policy likely to be the key areas of attention when Reserve Bank of Australia governor Philip Lowe delivers his address.

With employment figures also to be released today, we could see domestic macroeconomic factors emerge as key market drivers.

Scanning overseas markets, the FTSE 100 started in the black but unravelled throughout the day setting the tone for lacklustre trading in mainland Europe and providing a backdrop of negative sentiment as US markets opened.

The FTSE 100 came off 0.6% to close at 5935 points, while the DAX edged up slightly and the CAC 40 gave up a meagre six points.

In the US, markets were up slightly in morning trading but trended down across the board during the afternoon with the NASDAQ being hardest hit.

It finished down 95 points or 0.8% to 11,768 points, while the Dow fell 166 points or 0.6% to close at 28,514 points.

Keep an eye on oil stocks

Oil was the late mover on the commodities front with the Brent Crude Oil Continuous Contract surging from about US$42.20 per barrel to US$43.32 in afternoon trading.

This was in response to comments made by Russia’s energy minister Alexander Novak that the OPEC+ alliance would still be able to gradually ease production cuts from January as previously planned.

Gold pushed back through US$1900 per ounce, and it is currently hovering just above that mark.

Iron ore came off 1% to close at US$119.50 per tonne.

Aside from nickel, there was little movement amongst base metals.

However, nickel recorded a significant milestone, regaining the US$7.00 per pound mark, a level it only touched briefly in late August/early September.

Given that US$8 per pound is a long-term high for the metal, it is in extremely strong shape with potential for more upside if manufacturing activity continues to improve.

The Australian dollar was virtually unmoved overnight at US$0.716, but this could change today in response to Reserve Bank of Australia commentary.

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