ASX set to fall as fears of global slowdown persist

Stock Markets

Australian shares are set to fall as US stocks tumbled on Monday, with warnings from Caterpillar Inc (-9.13%) and Nvidia Corp (-13.82%) adding concerns about a slowing Chinese economy and tariffs chipping into US corporate profits. Nine of the eleven major sectors comprising the S&P500 closed in negative territory, with the consumer staples and real estate sectors closing in the green. The Dow Jones, S&P500 and NASAQ100 were down overnight, with the indices losing 208.98 (-0.84%), 22.38 (-0.84%), and 90.28 (-1.33%) points respectively. Investors remain on edge ahead of a busy week of data and corporate results with an impending US Federal Reserve policy meeting as well as the resumption of high-level trade talks between the US and China. ASX 200 futures are currently down 22.62 points. 

Commodities and Currencies

Brent crude prices experienced a strong rise in earlier weeks benefitting from hopes that OPEC will manage to achieve production cuts. Brent crude has retraced 3.2% to US$59.65 a barrel and is now sitting in a consolidation zone dating back to November-December 2018.

The iron ore price surged to its highest in more than 10 months following another tailings dam disaster at a Vale-owned mine in Brazil. Iron ore is currently up 4.7% to $US78.18 a tonne.

The spot price of gold is up about $4.35 (+0.34%) and is now hovering around US$1302.45. Having cleared the resistance at $US1299 the spot price of gold is likely to break to $US1311.

The AUD is currently down 0.2% and is sitting at US71.67¢. 

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.