Morning All
Thanks Shants
The ASX looks set for a s0ft opening with weak leads from the US, and following an underwhelming response Monday to the S&P's 2.1% rally Friday.
Lately Dec. SPI futures were down 14 points to 5135
Energy and commodities weakness dragged on Wall St. with oil prices at their lowest price in seven years and continued sell downs in base metals.
US dollar strength fuelled the weakness, the higher dollar making it more expensive to hold crude positions.
Brent crude LCOc1 and U.S. crude CLc1 extended their decline and fell as much as 6 percent, after OPEC's meeting last week failed to address a growing supply glut.
Oil majors Exxon (
XOM.N) and Chevron (
CVX.N) fell about 3 percent and were the biggest drags on the S&P and among the stocks weighing on the Dow.
The S&P materials index .SPLRCM fell 1.9 percent, its steepest fall in three weeks, with Dow Chemicals (
DOW.N) and DuPont (
DD.N) falling about 2 percent.
The impact of the fall in oil prices offset some of Friday's gains that were triggered by a strong jobs report.
The solid November employment report showed that the economy was strong enough to absorb an interest rate hike, which is widely expected to be raised when the Federal Reserve meets on Dec. 15-16.
"The Fed is pretty locked in regarding a hike next week and any fall in commodity prices will be seen as transitory factors," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
However, Hogan said a further plunge in oil prices and a stronger dollar could mean subsequent rate hikes will be gradual.
The S&P500 declined .85%, the Dow .7%
This theme was similar in Europe which finished higher, but it was oil weakness that overhung the session
Euro STOXX +.9%
DAX +1.1%
The House of Pain
The currency woes for commodity exporters just got a little more painful.
Exchange rates for resource-rich nations plunged as crude oil and
iron ore prices sank to the lowest since 2009 amid a supply glut. The Australian dollar fell 1.02pc to US72.65¢ at 1.59pm in New York.
"With the bias for commodity prices to remain under pressure, it's not surprising that the commodity currencies have fallen back,"said Peter Dragicevich, a foreign-exchange strategist at Commonwealth Bank of Australia in London. "Particularly the commodity-exporting, emerging-market countries - their currencies are going to remain under pressure for quite a while."
The raw commodity sector continues to suffer as its leader, crude oil, saw Nymex futures trade below $38.00 a barrel Monday. The next downside target is the $33.20 level, which is the 2009 low. Until crude oil stops its slide in prices it will be difficult for most other raw commodity markets to get sustainable upside traction.
Oil $37.61 -$2.36
"Commodity prices are under significant pressure," said Mazen Issa, senior foreign-exchange strategist at Toronto Dominion Bank in New York. With traders expecting the Federal Reserve to raise interest rates at its meeting next week, it "still looks attractive" to buy the US dollar against the currencies of resource-exporting countries, he said.
Ore with 62 per cent iron content delivered to Qingdao fell 2.4 per cent overnight to $US39.06 a dry ton, according to Metal Bulletin Ltd. The raw material is headed for a third annual decline and has lost 80 per cent since peaking in 2011 at $US191.70. Indeed, the price is the lowest since 2005, based on annual pricing that preceded the current spot-based system.
Gold was moderately lower in early afternoon trading Monday, on a downside correction following a solid advance last Friday that saw prices hit a two-week high and score a technically bullish weekly high close. The key “outside markets” were also in a bearish posture for the precious metals Monday, as the U.S. dollar index was higher and crude oil prices were sharply lower and near a seven-year low. February Comex gold was last down $8.00 at $1,076.20 an ounce. March Comex silver was last down $0.188 at $14.34 an ounce.
HUI (gold bugs) 115.24 -6.2
News Today
Westpac consumer sentiment
Home loans m/m
USA= economic optimism
Sources Reuters, SMH, *****
Have a good day
