The ASX fell in trading today, unable to weather the dual headwinds of a weak overnight performance on Wall Street and falling iron ore prices, which hit Australian mining giants BHP (ASX:BHP), Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) hard – all down more than 1.5% intraday.
The ASX200 dipped 0.67% or 50.3 points to 7,470.2, maintaining its position above 7,400 points for the fourth week in a row.
The Materials sector took the biggest hit, of course, shedding 2.05%. Healthcare (+0.46%), Consumer Discretionary (+0.42%), Info Tech (0.55%) and Real Estate (+0.30%) all made gained, but were unable to make up for the mining sector's losses.
The other sectors were down between 0.15% and 1.12%, placing the bourse firmly in the negatives for the day.
Most commodities were also in the red, particularly palladium, platinum and copper, which lost between 1.61% and 1.75%.
West Texas Crude was the standout today, gaining 1.85% today and up 1.36% for the month, mostly due to fears the conflict in the Middle East could escalate.
Nickel (+0.74%) and zinc (+0.76%) also put in a showing, regaining some lost ground from a week of dipping prices.
Wall Street loses momentum
Capital.com senior market analyst Kyle Rodda joins us again today to discuss some anxiety on Wall Street ahead of the latest inflation data, the recent oil price rebound and today’s Australian CPI data.
“Wall Street’s recovery eased as market participants looked ahead to Thursday night’s inflation data,” Rodda said.
“The news flow was limited overnight, with the discourse dominated by the familiar speculation about the pace and timing of US interest rate cuts.
“Funding pressures seem less concerned after a three-year Treasury auction passed with solid demand, suggesting interest rate volatility is considered a much lower risk than just a few months ago. That is supportive of risk assets.
“However, given momentum in the markets began with a trend lower in interest rate expectations, the fact that it has stalled is causing inertia in broader financial markets.
“Oil prices bounced amid ongoing geopolitical uncertainty in the Middle East, regaining some of the prior session’s loss from Saudi price cuts.
“A ratcheting up of tensions between Israel and Hezbollah in southern Lebanon and the spectre of attacks on freighter ships by the Houthis in the Red Sea are fuelling supply risks and the possibility of a broader regional conflict.
“Crude prices show tentative signs of a momentum reversal; however, the market is defending the 50-day moving average.”
Crude oil spot price (past performance is not a reliable indicator of future results).
“Bitcoin prices are moving as hope ramps up for SEC approval of ETFs as soon as this Thursday,” Rodda continued.
“There was a touch of controversy overnight, though, with the SEC’s X account hacked and a post published stating that the ETF has been approved.
(Source: X.com @SECgov)
“The organisation quickly removed the post and denied the news. However, it fuelled a mini pump-and-dump of the Bitcoin price, rejecting resistance at roughly $48,200.”
Finally, Rodda believes that today’s monthly CPI data, which showed an increase of 4.3% in the 12 months to November (lower than predicted), supports “the dovish case for no further rate hikes”.
Michelle Marquardt, ABS head of prices statistics, said: "This month’s annual increase of 4.3% is down from the 4.9% rise in October and is the smallest annual increase since January 2022.”
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