The ASX is tipped to open higher today after a volatile day’s trade in the US overnight.
ASX futures were up 17 points or 0.26% to 6,483 points this morning despite all the US indices pointing down.
US investors continued the months-long handwringing about where the recession precipice is and whether the Federal Reserve will be throwing them over in its bid to curb inflation.
The S&P/ASX 200 fell 105 points or 1.6% on Monday, while the Dow lost 1.1%. The Nasdaq shed the least, down 0.6%.
The Aussie dollar continued the trend for most non-US currencies at the moment, sliding 1.1% early this morning, and trading as low as 64.38 US cents at one point.
Other major currencies were weaker too – the Euro fell from around US$0.9699 to US$0.9599, coming to rest at US$0.9610 at the US close. And the Japanese yen fell from near 143.58 yen per US dollar to JPY144.78 and was near JPY144.65 at the US close.
Pound plummets against greenback
As for the pound, it has plunged to an all-time low. Analysts sheet this home to concern about new Prime Minister Liz Truss' newly revealed emergency budget measures, including a package of tax cuts that will throw the government even further into debt without making things better for the majority of people.
The slump comes at the exact moment the US dollar is enjoying a two-decade upswing, bringing the pound closer to parity with the dollar than ever before – a psychological milestone Brits are probably not ready to face in the current moment. Fifteen years ago, the ratio was 1:2 in the pound’s favour.
The pound’s pounding is only going to make the UK energy crisis worse because oil and natural gas are priced in US dollars. UK motoring association AA estimates that Britons are paying 5 pounds more on average to fill up their cars since the start of 2022 because of the downward direction of the currency.
In Europe the sharemarkets were mixed. The pan-European STOXX 600 index fell by 0.4% and the Dax fell 0.5%.
Interestingly, Italy's FTSE MIB index bucked the trend, rising 0.7% following the election of the far-right coalition led by Georgia Meloni, which won a majority in both houses of parliament, as other markets grappled with what this means in the long term.
The Ifo index dropped to 84.3 from 88.6 in August, while the UK FTSE 100 index was steady but the UK FTSE 250 mid-cap index dropped 1.4% to near two-year lows on the back of the record poor performance of the pound.
Oil, metals and gold
Global oil prices fell by around 2.5% on Monday to sit at nine-month lows, stifled by the strong US dollar and contained by continuing uncertainty about new Russian sanctions.
Brent crude fell by US$2.09 or 2.4% to US$84.06 a barrel, while US Nymex slipped by US$2.03 or 2.6% to US$76.71 a barrel.
Base metal prices fell sharply on Monday. The bellwether copper did its thing, falling by 1.2% on continued fears of a global slowdown and weaker demand, but nickel slumped further, losing 5.4%. Tin gained 1.9%.
The gold futures price shed US$22.20 an ounce or 1.3% to a 2.5-year low of US$1,633.40 an ounce.
Spot gold was trading near US$1,622 an ounce at the US close. Iron ore futures rose by 12 US cents or 0.1% to US$99.01 a tonne.