The ASX 200 commenced the last session of the week in negative territory, reflecting the lower finish for June SPI futures in after-hours trade. The weaker tone was driven by losses for US equities overnight which retreated in response to higher US interest rates. US ten year T-Note approached their highest levels since the beginning of February at 2.92%. The close of US trade saw the Dow Jones index down by 83 points or 0.3% after being down 191 points earlier in the session. The S&P 500 index fell by 0.6%, while the Nasdaq fell by 57 points or 0.8%
The ASX 200 opened with a loss of 5 points before trading to an 18 point deficit at the low of the morning. Thereafter the market remained within sight of those levels for most of the morning, before breaking into positive territory. As lunch loomed, most ASX sector remained in the red, with the exception of Financials which led the recovery. Participation was below average with 1.2 billion shares changing hands in the period up to lunch worth $1.6 billion. 634 stocks higher, 566 lower and 401 unchanged.
Bulk iron ore miners were generally lower, despite iron ore prices continuing to rise in response to stronger steel prices, which have encouraged steel mills in China to procure more iron ore. Steel demand concerns have weighed on steel and iron ore prices since March, however moderating stockpiles have played an important part in improving sentiment. Iron ore prices rose the most part of 3% in the last day to $68.30. Fortescue Metals Group (FMG) shares were 0.8% or 4 cents lower at $4.67 although the stock has firmed by almost 3% this week.
In a similar vein to the miners, energy names were lower initially as a group – moderating after solid gains earlier in the week. The Energy subindex is higher by 2.8% over the last 5 days, the second most improved group behind Materials. Overnight, global oil prices hit 4-year highs but pared gains into the close of trade. OPEC producers told Reuters on Thursday the inventory overhang has largely disappeared, even as production in the United States increases. Also traders digested reports that Saudi Arabia would be happy for crude to lift to rise to US$80 or even US$100 a barrel. At lunch Santos (STO) was flat at $6.00, Oilsearch (OSH) was 5 cents or 0.6% higher at $7.82.
Financials recovered from mixed performances in early trade. ANZ Bank (ANZ ), National Australia Bank (NAB ), Westpac (WBC) were all higher, with the exception of the Commonwealth Bank (CBA) which was flat. Early trade saw headwinds for the group following the latest developments at the Royal Commission and press reports that the Federal Government is considering criminal penalties for breaches of the Corporations Act heard at the bank inquiry.
The Aussie dollar weakened in line with the trend of the last 12 hours, which has seen most major currencies relegated against the US dollar. Rising long term US interest rates saw the Aussie dollar fall from highs near US78.10 cents overnight, to lows near US77.15 cents and was near US77.30 cents in late US trade. In early regional trade the local unit was at 77.20 US cents.
Published by CommSec