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Morning Market Wrap: ASX expected to open significantly down

29 Jun 2020
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The Australian market is expected to begin the week down, with ASX 200 futures trading at 5,756 or -1.36% as of 9:00am AEST. This comes after the US case numbers topped 2.5 million with several US states delaying their reopening.

Friday saw the US market fall sharply on the negative economic impact of a second wave of infections and concerns about the US-China trade deal. All three major US indexes fell with the S&P 500 recording a loss of 2.46% to conclude the day at 3,009.05. The Nasdaq also saw a considerable fall of 2.59% to finish at 9,757.22, and the Dow Jones recorded the greatest fall with 2.84% to end at 25,015.55. Friday saw the largest single day total of Covid-19 cases in the US, with more than 40,000 people contracting the virus. This prompted the US states of Texas, California and Florida to delay their reopening of bars and clubs which had a rippling effect throughout the market, with a higher likelihood of a national lockdown to contain the second wave. The US Federal Reserve also capped dividends and prohibited buybacks until September which saw the major banks tumble. Out of the big 4 American banks, JPMorgan fell by 5.48%, Bank of America recorded a loss of 6.35%, Wells Fargo was the worst hit with a fall of 7.42% and Citibank declined by 5.88%. Facebook also declined significantly, down 8.32% due to a significant increase in advertiser defection.

The ASX 200 finished the week on a positive note, increasing by 1.49% on Friday to finish on 5,904.10. Travel stocks were hit hard last week with major airports bleakly backing Qantas’ prediction that international travel won’t resume until this time next year. This comes after Qantas announced they were making 6,000 jobs redundant and have grounded 100 planes for at least 12 months. Victoria saw over the weekend an additional 90 cases, the most since April 2, which has threatened tougher lockdowns across hard-hit Melbourne suburbs.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Ahead today the US Pending Home Sales Report is expected, which measures the change in the number of homes under contract to be sold.

Most major currencies were trading lower against the USD, with the Australian dollar trading down 0.079% at US$0.6855. The Euro was trading slightly higher against the USD at US$1.1220, up 0.02%. Global Oil prices were trading lower, with the West Texas Intermediate trading 0.59% lower US$38.49 per barrel, which can be largely attributed to growing case numbers in Texas clouding the demand outlook. Copper saw an increase of 1.79% to US$5,985.50 per tonne, after state owned Chilean copper miner Codelco suspended operation at its Chuquicamata mine. Iron ore remained stable, falling only by 0.2% to US$104.35 a tonne.

 

This article was written by Alexander Single – Account Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3623.

Rivkin does not ever provide financial advice. Please consider your own circumstances before purchasing any of our products or acting on our general advice, for any Rivkin product or recommendation.

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