ASX 200 Futures are indicating a 0.75% or 61.5-point drop in early ASX trading this morning, as continued weakness in the Chinese economy weighs on the Aussie dollar, which fell to a two-year low at 62 US cents per dollar.
US equities took a bit of a dive in the final days of 2024 before ending on a high note, as the S&P500 notched its best two-year period of growth since the Dot.com bubble burst.
A year of growth ahead?
Capital.com senior financial market analyst Kyle Rodda believes the conditions are right for company earnings growth this year, as the Trump Administration is expected to make tax cuts.
“However, stocks are quite richly valued, positioning skewed quite bullish and there’s the lingering question of a fair price for risk-free rates, raising fears of a market due some sort of pullback or correction,” Rodda said.
It’s likely to be a quiet day of trading on the ASX for the first day of the year, as many of us are still in holiday mode. The ASX200 finished the year with a 7.5% gain, compared to a 7.8% lift the year before.
“The AUD/USD has slipped below 62 cents and to a new two-year low, with Chinese President Xi’s New Year's address pointed to as the latest catalyst for a weaker Aussie Dollar,” Rodda explained.
“The AUD/USD remains primarily a proxy for China’s economic malaise and the absence of sufficient policy support to jump-start economic activity.
“A firmer US Dollar also remains a significant part of the equation due to the US economy’s world-beating performance and the expected impact of Trump tax cuts and tariffs on growth, inflation and monetary policy.”
Market snapshot
- ASX Futures: -0.75% to 8,150.5.
- AUD: -0.51% to US$0.61895.
- S&P500: -0.43% to 5,881.63.
- Nasdaq: -0.90% to 19,310.79.
- FTSE100: +0.64% to 8,173.02.
- FTSE300: +0.23% to 2,580.45.
- Spot Gold: -0.02% to US$2,624.63.
- Bitcoin: +1.15% to US$94,543.13.
- WTI Crude: +0.21% to US$71.87.