The sharemarket looks to open slightly lower today despite mildly positive leads from the US. The Sept SPI was down 13 points, even though US markets rallied slightly after earlier European market weakness. The DAX lost 2%, FTSE 1.6% and Euro STOXX 50 2.3$, before the US markets SP 500 closed up .6% at 2081.
Australia's dollar slumped below 74 US cents for the first time in six years overnight, as the US dollar continued to go from strength to strength.
The Aussie briefly dipped to US73.98¢ just after midnight AEST on Wednesday morning before recovering. At 6am AEST, it is fetching around US74.50¢. Overnight, the US greenback hit a five-week high against most major currencies on the back of continuing global concerns, as unfinished efforts to address Greece's debt crisis and a rout in commodities pushed investors into the safest assets.
The Australian dollar's fall comes after RBA Governor Glenn Stevens kept interest rates at a record low for a second month on Tuesday and said a weaker currency is still needed.
The currency has fallen against all except one its 16 major counterparts this month after the Reserve Bank of Australia left its benchmark at 2 per cent Tuesday as economists forecasted.
"We still expect the Aussie dollar to continue to decline," said Mitul Kotecha, head of Asia Pacific foreign- exchange strategy at Barclays Plc in Singapore. "The weakness of non-mining activity, deteriorating risk conditions and the overvaluation as commodity prices decline all bode negatively for Aussie dollar."
Iron ore's bear market deepened, with prices dropping below $US50 a ton for the first time since April on concern that low-cost supplies from Australia and Brazil will expand further while demand stumbles in China.
Ore with 62 per cent content delivered to Qingdao sank 5.1 per cent to $US49.60 a dry ton on Tuesday, falling for a ninth day, according to Metal Bulletin Ltd. Prices entered a bear market Monday, dropping more than 20 per cent from a June high.
Iron ore's renewed slump highlights that the same factors of surging supply and stalling demand growth, which dragged prices to a decade-low early April, remain at the forefront. Momentum is clearly negative, which is hard to reverse in the near term, according to Paul Gait, an analyst at Sanford C. Bernstein & Co. The Minerals Council of Australia, which counts BHP Billiton and Rio Tinto Group as members, defended local miners' policy of adding more output on Tuesday.
"In recent weeks, we have seen trade pick up," Jeremy Sussman, a mining analyst at Clarksons in New York, said before Tuesday's price data was released. "If this continues, we think iron ore can continue going lower," Sussman said, reiterating a view that the price may slump to $US40 a ton.
The nine-day decline saw prices drop 21 per cent, with losses spurred by figures showing inventories in China rebounded, while exports in June from Australia's Port Hedland were a record. So far this year, iron ore lost 30 per cent, bottoming at $US47.08 a ton on April 2.
Gold lost 1.1% to $1157
Oil unchanged at $52 barrel
metals took it right up the kazoo
Copper lost 4.3% to $2.42
Nickel lost 9.3% to $4.78
Zinc lost 3%
Lead lost 2.5%
Slumps in iron ore and base metals look to drag our market lower today. BHP lost 1.6% overnight, however banks, telcos and retailers may arrest some downward pressure
