On Friday, the S&P/ASX 200 Index (ASX: XJO) experienced a significant drop, closing the week down by 0.8% to 7,971.6 points. Investors are now looking ahead to Monday with cautious optimism, wondering if the market will recover. Here are five key factors to watch:
ASX 200 Outlook
The Australian share market is poised for another challenging day on Monday, following a weak performance on Wall Street on Friday. The latest SPI futures indicate that the ASX 200 is expected to open 141 points, or 1.75%, lower. In the United States, the Dow Jones fell by 0.9%, the S&P 500 dropped by 0.8%, and the Nasdaq also declined by 0.8%. This market downturn occurred before the announcement that US President Biden is withdrawing from the presidential race.
Decline in Oil Prices
Energy shares on the ASX 200, including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS), may face difficulties due to a significant drop in oil prices on Friday. According to Bloomberg, the WTI crude oil price decreased by 3.25% to US$80.13 per barrel, and the Brent crude oil price fell by 2.9% to US$82.63 per barrel. Hopes for a Gaza ceasefire contributed to the decline in oil prices.
QBE Insurance Group Update
QBE Insurance Group Ltd (ASX: QBE) is expected to be a focus, following positive remarks from Goldman Sachs (NYSE:GS). The investment bank sees significant value in QBE shares and has maintained a $21.00 price target, suggesting a potential upside of nearly 24%. Despite a disappointing update from its US peer, Travelers (NYSE: NYSE:TRV), Goldman Sachs believes the outlook for QBE remains strong, with pricing conditions staying favorable.
Gold Price Tumble
Gold shares on the ASX 200, such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: ASX:NST), might see a rough start to the week following a sharp decline in gold prices on Friday. CNBC reports that the spot gold price dropped by 2.3% to US$2,446.8 per ounce, driven by a stronger US dollar and profit-taking activities.
South32 Quarterly Update
South32 Ltd (ASX: S32) will release its quarterly update today, attracting significant attention. Goldman Sachs has provided insights, suggesting that most of South32's assets, excluding manganese, are expected to meet FY24 guidance. However, the Sierra Gorda copper operation may fall short of expectations due to a poor performance in April. Despite this, an increase in base metal prices in June is anticipated to boost free cash flow to approximately US$250 million, up from US$150 million in the March quarter. Net debt is expected to decrease to around US$680 million by the end of June.
These factors are expected to influence the performance of the ASX 200 and individual stocks as the new week begins. Investors will be closely monitoring these developments to gauge the market's direction.