The price of iron ore has slumped to a fresh two-year low, falling 0.5% overnight to $US86.70 per metric tonne. The price of spot gold dropped by 1.6% while Brent Oil suffered a 2.4% drop to $100.45 a barrel. Locally, shares are poised to open unchanged ahead of the latest reading on Australian economic growth after Wall Street closed mixed in narrow trade.
What you need2know:
• SPI futures flat at 5646
• AUD at 92.80 US cents, 97.54 Japanese yen, 70.67 Euro cents and 56.32 British pence.
• On Wall St, S&P 500 -0.1%, Dow -0.2%, Nasdaq +0.4%
• In Europe, Euro Stoxx 50 +0.2%, FTSE +0.1%, CAC -0.03%, DAX +0.3%
• Iron ore falls 0.5% to $US86.70 per metric tonne
• Spot gold slips 1.6% to $US1265.11 an ounce
• Brent oil down 2.4% to $US100.45 per barrel
What’s on today
Australia economic growth, GDP, RBA governor speech to CEDA; US auto sales, Beige Book; China non-manufacturing PMI, HSBC services PMI, HSBC composite PMI.
Stocks to watch
Qube Holdings, the rapidly expanding logistics company, is the latest stock to surface on investors’ block trade radar.
Deutsche Bank upgraded Perpetual Ltd to “buy” and has a $49.90 a share price target on the stock.
Hartleys Research has retained an “accumulate” on Atlas Iron and a 12-month price target of 64¢ as it lowers its iron ore price assumptions in line with recent sell-side consensus.
Currencies
The Australian dollar’s days as a carry currency could be numbered, the Australian Financial Review reports, if the European Central Bank disappoints and takes only incremental action on Thursday at its highly anticipated policy meeting.
The US dollar jumped to its highest this year against the yen, lifted by strong US economic data, while the euro slipped to a one-year low on speculation the European Central Bank will move toward looser monetary policy when it meets later this week.
The greenback rose against a basket of major currencies, rising 0.3 per cent to 82.99 and hitting its highest since July 2013. It traded above 105 yen for the first time in eight months on signs of relative strength in the world’s biggest economy.
“Even if (ECB president Mario) Draghi doesn’t announce rate cuts or QE (asset purchases), I think he will open doors to further significant action further down the road and that should be enough to support the market at least for now,” said Nick Stamenkovic, a strategist at RIA Capital Markets in Edinburgh.
Commodities
The value of precious metals held by China’s biggest lenders surged 66 per cent from a year ago as banks lease more gold to customers because tighter borrowing rules make it harder to lend funds, according to Bloomberg.
Zinc climbed to a four-week high and aluminium neared an 18-month peak in markets driven by momentum-based speculators and computer-driven funds. But analysts cautioned that both zinc and aluminium prices were moving ahead of supply/demand fundamentals as inventory levels remain high.
Nickel slipped 0.3 per cent to $US18,690 a tonne, brushing off threats of greater sanctions on Russia, one of the world’s top producers of the metal, even though sister metal palladium has soared to a 13-1/2 year top.
United States
The Dow and S&P 500 ended lower on Tuesday, with energy shares among the biggest negatives, while the Nasdaq edged up.
Home Depot said it was working with law enforcement to investigate "some unusual activity" related to customer data but that it could not confirm if it had become the latest retailer to be hit by a large-scale security breach.
US manufacturing activity hit a nearly 3-1/2-year high last month and construction spending rebounded strongly in July, signs the economy entered the third quarter on strong footing.Tuesday's upbeat data added to reports on employment and housing that have suggested growth remains sturdy, despite a slowdown in consumer spending in recent months.
Europe
A fall in major healthcare stocks, after drug maker AstraZeneca tried to play down speculation about a new bid from Pfizer, pegged back European stock markets on Tuesday. Equity investors were also cautious pending any clues on policy from the European Central Bank on Thursday.
Aurel BGC analyst Gerard Sagnier thought European stock markets could soon rise back to peak levels set earlier in June, when Germany’s DAX hit a record high of 10,050.98 points. The DAX rose 0.3 per cent to 9507.02 points on Tuesday.
What happened yesterday
Local shares hit a fresh six-year closing high as confirmation of continuing low interest rates domestically and the promise of increased monetary policy support in Europe lifted investor spirits.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each added 0.5 per cent, to 5658.5 points and 5656.8 points respectively.
The market gained traction in afternoon trade, led higher by Telstra Corporation, up 1.4 per cent at $5.66.
