ASX Expected to Open Lower as Investors Move Towards Safer Assets

Stock Markets

US: The US's three benchmarks all recorded significant falls in yesterday's session, with the Dow falling 391 points (1.5%), the Nasdaq decreasing by 95 point (1.2%) and the S&P500 finishing down by 1.2%. The US budget deficit also widened by an additional US$120 billion in July, up 27% this year. US 10-year notes fell a further 10 basis points to 1.65%, further narrowing the gap to 70 basis points with its Australian equivalent.

ASX: The Australian market is expected to open lower as the combined effect of investors moving out of the market into perceived safer assets and a continued drop in the currency. ASX futures were down to 6480 as of 8am AEST or 0.8%, with the AUD down 0.6%. Reporting season has seen some positive results with JB HI-FI, Ansell and REA Group all recording significant gains.

Commodities & Currencies: Argentina's peso currency crashed initially dropping 30.3% to a record low of 65 per $US but later recovered to end the day 15.3% weaker at 53.5 per $US. This saw the Merval stock index (the most important index of the Buenos Aires Stock Exchange) fall by almost 38%. Global oil prices steadied with Saudi state-owned oil explorer Aramco decreasing their spending on wells and other development projects by 12%, likely tightening supply. Gold continued its increase by US$8.70 to US$1,517.20 an ounce and iron ore remained unchanged at US$94.80 due to Singapore having a public holiday.  

The spot price of goldis currently up 1.29% at US$1,511.49 per ounce. The AUD is currently down 0.35% at US$0.6751.

This article was written by Alex Single – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.