The ASX took a beating yesterday, falling 1.16% and undoing much of the progress made over the month of May. ASX Futures indicate that today may be much of the same, pointing to a 58.4-point or 0.76% drop in early trading.
US and European markets faired little better overnight with both falling as the FTSE100 and FTSE300 hit three-week lows.
US and European markets
(Source: Commsec)
US bonds rose overnight with the final auction of the week, creating negative market sentiment on the back of interest rate cut uncertainty.
10-year bonds rose 7 points to 4.62%, hitting a four-week high, while 2-year bonds lifted 2 points to 4.97%.
It was overall a bad day for markets – the Dow Jones fell to its lowest level in almost a month, and S&P500 Utilities stocks took a 1.3% hit due to their rate-sensitive nature.
American Airlines (NASDAQ:AAL) dipped 13.5% on a dour second-quarter profit forecast, while UnitedHealth (NYSE:UNH) lost 3.8%.
ConocoPhillips (NYSE:NYSE:COP, ETR:YCP) fell 3.1% after agreeing to buy Marathon Oil (NYSE:MRO) in a US$17 billion deal, which drove Marathon up 8.4%.
The Dow fell 1.1% or 411 points, the Nasdaq 0.6% or 99 points and the S&P500 0.7%.
In Europe, all major sectors absorbed losses. Resources and utilities led the markets down, falling 2%, while yields on Europe’s bond benchmark, the 10-year bund, rose to a six-month high at around 2.689%, buoyed by an unexpected increase in German inflation numbers, which came in at 2.8% instead of 2.4%.
Mining giant BHP (ASX:BHP) abandoned its efforts to acquire Anglo American (JO:AGLJ) after the latter refused to extend the bid deadline, causing Anglo to shed 3.1%.
The FTSE300 fell 1% overall, while the FTSE100 dipped 0.9%.
Currencies and commodities
The US dollar strengthened in overnight trade, rallying against all three currencies tracked.
The Euro fell from US$1.0857 to near US$1.0800, the Aussie from US66.60 cents to near US66.10 cents and the Japanese Yen from 157.01 yen per US dollar to near JPY157.70 at the US close.
Oil prices slipped as traders eyed the geopolitical conflict in the Middle East, weighing it against strong oil supplies.
Brent dipped US62 cents or 0.7% to US$83.60 a barrel while US Nymex lost US60 cents or 0.8% to US$79.23 a barrel.
Metals were a mixed bag overnight – copper took a strong hit, falling 1.4%, but aluminium lifted, gaining 1.8% to its highest level in almost two years as supply tightened.
Gold also fell, slipping US$15.30 or 0.6% to US$2,341.20 an ounce as the US dollar strengthened, but iron ore gained US6 cents or 0.1% to US$117.74 a tonne, mostly because of promising signs in China’s property market.
On the small cap front
The ASX Small Ordinaries shed 0.68% yesterday, beating the ASX200’s performance despite the dip.
You can read about the following and more throughout the day on our website.