Futures down 50 points, gold up, but oil stocks in the firing line

By Trevor Hoey. Published at Sep 30, 2020, in Market Wrap

There was zero movement in the S&P/ASX 200 index (XJO) on Tuesday as slight declines in index heavyweight stocks that are constituents of the financials and materials indices were offset by strong gains in the tech (+2.4%) and communication services (+0.8%) sectors.

Once again it was Xero (+3%) and Afterpay (+2.5%) that were at the forefront of the tech surge with the former pushing through the $100 per share barrier to close in on its 12 month high of $103.48.

However, with negative sentiment evident in overseas markets and the potential for fallout from the presidential debate, the ASX is likely to struggle today.

The ASX SPI200 index is certainly pointing in that direction, down 50 points to 5885 points.

One of the few shining lights could be gold as it reclaimed US$1900 per ounce overnight.

Negative sentiment started in Europe with the FTSE 100 shedding 0.5% to close at 5897 points.

The mood was similar in mainland Europe with the Stoxx 600 down 0.5%, but the DAX and the CAC 40 fared a little better, down 0.3% and 0.2% respectively.

While the Dow got off to a solid start, it lost its way during the day, falling from about 27,600 points to hit a low of 27,338 points before closing at 27,452 points, a decline of 0.5%.

It was a similar story with the S&P 500 as it came off 0.5% to close at 3335 points.

The NASDAQ once again outperformed the other indices, only falling 32 points or 0.3% to close at 11,085 points.

On the commodities front, gold was the star performer as it continued a strong run that started on Monday.

The precious metal closed just shy of its high for the day of US$1904 per ounce.

The iron ore miners could do well today following a 1.3% kick that saw the commodity push past US$117 per tonne.

However, the same can’t be said for energy stocks, and this was highlighted last night in the US with Chevron Corp (-2.7%) placing a significant drag on the index.

The Brent Crude Oil Continuous Contract hovered in the vicinity of US$42.70 per barrel for the first half of the session before plunging below US$41 per barrel late in the day.

The slight recovery to US$41.50 per barrel is unlikely to restore confidence in a commodity that has consistently disappointed in 2020.

Base metals generally trended lower or flat-lined overnight.

While nickel and zinc both held their ground, copper and lead came off slightly.

The Australian dollar strengthened overnight, pushing just above the US$0.71 mark.

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