The big mining companies were all down in the first few minutes of trade after iron ore and copper prices dropped overnight, pulling the benchmark S&P/ASX200 down with them.
At 10.20am (AEDT) on Tuesday, Rio Tinto was down 39.5 cents, or 0.82 per cent, at $47.73.50. BHP Billiton was down 35.5 cents, or 1.77 per cent, to $19.71.50, and Fortescue Mining Group was down 5.0 cents, or 2.29 per cent, at $2.13.
“After five straight days of gains, it looks like we’re going to struggle to make it six in a row,” said optionsXpress analyst Ben Le Brun.
“Consolidation is the key word and the key thematic given the meteoric rise of the last week.”
Le Brun said recent market behaviour suggested that the stocks could claw back some value after opening on their lows.
“For the bulls out there, that will be the best case scenario but we’re certainly deep underwater at the open,” Le Brun said.
The big four banks were also in the red following their strong gains of the past week, with Commonwealth Bank down 62 cents, or 0.77 per cent, at $79.78.
National Australia Bank was down 21 cents, or 0.69 per cent, at $30.01; Westpac was down 9.5 cents, or 0.30 per cent, at $31.79.50; and ANZ was down 5.0 cents, or 0.18 per cent, at $27.80.
Macquarie Group was down 93 cents, or 1.12 per cent, at $81.98.
Transurban’s shares were in a trading halt after the toll road operator announced a $1.025 billion equity raising to help fund the $1.870 billion purchase of Brisbane’s AirportLinkM7 tunnel.
Le Brun said the market would likely welcome Transurban’s continued growth through acquisition given strong revenue growth from toll roads.
US treasuries had a largely flat performance overnight in the lead-up to America’s key Thanksgiving holiday, St George senior economist Hans Kunnen said
“Thanksgiving is coming up on Thursday and as a result there wasn’t a lot driving the US bond market other than `let’s clear up our positions and get ready for a good time’,” he said
“With no real (Australian) data out until Thursday and no leads from the US, I imagine it will be a quiet day for Aussie bonds.
Official national capital expenditure numbers will be released on Thursday.
Investors and traders are also looking ahead of a speech from Reserve Bank governor Glenn Stevens later on Tuesday
At 8.30am (AEDT) on Tuesday, the December 2015 10-year bond futures contract was trading at 97.055 (implying a yield of 2.945 per cent), up from 97.030 (2.970 per cent) at Monday’s close.
The December 2015 three-year bond futures contract was at 97.850 (2.150 per cent), up from 97.830 (2.170 per cent).
The stock market in New York has closed LOWER, with final figures for the Dow Jones Industrial Average DOWN 31.13 points at 17,792.68, while the Standard & Poor’s 500 index is DOWN 2.58 points at 2,086.59.
The NASDAQ Composite index is DOWN 2.44 points at 5,102.48.
The Australian dollar is trading at 71.92 US cents, UP from 71.77 at Monday’s close.
The local currency is worth 88.35 Japanese yen, 67,66 euro cents, 47.58 British pence and 1.1037 New Zealand dollars.
Benchmark WTI crude oil is DOWN 15 US cents at $US41.75 per barrel.
The Australia market is set to open LOWER, with the SPI futures index DOWN 18 points at 5267.
The benchmark S&P/ASX200 index GAINED 20.3 points, or 0.39 per cent, at 5,276.4 points.
The broader All Ordinaries index ROSE 21 points, or 0.4 per cent, at 5,326.5 points.
The spot price of gold is $US1,069.30, DOWN SLIGHTLY from Monday’s close of $US1,070.0.
ENERGY
Crude oil prices rose after Saudi Arabia’s pledge to work on price stability offset some worries about the global oil glut.
In late US trading, benchmark Brent futures were up 41 cents at $US45.07 a barrel. US crude’s West Texas Intermediate (WTI) futures were up seven cents at $US41.97 a barrel.
PRECIOUS METALS
Gold has fallen one per cent, nearing last week’s 2010 low on a robust US dollar and upbeat comments from Federal Reserve officials on a possible US rate rise in December.
White metals tracked gold lower, with silver dropping to the lowest level in more than six years and platinum to a seven-year trough.
Spot gold was down 0.9 per cent at $US1,068 an ounce at 3pm EST (0700 Tuesday AEDT), down for a 13th of the 16 trading days so far in November. Its session low was $US1,066.60, just shy of last week’s lowest since February 2010 at $US1,064.95.
US gold futures for December delivery settled down 0.9 per cent at $US1,066.80 an ounce after hedge funds and money managers switched to a bearish position.
“I wouldn’t be surprised to see prices fall below $US1,000 as expectations of a rate hike affect sentiment,” Natixis analyst Bernard Dahdah said.
“There have been substantial outflows from ETFs and central bank demand only shows additions from gold-producing countries, so generally speaking fundamental demand isn’t really there to support prices.”
Silver fell as much at 2.2 per cent to $US13.86 an ounce, the lowest since August 2009 while platinum fell 1.5 per cent to a seven-year low of $US839.50 an ounce on worries about demand.
Palladium fell 4.4 per cent to $US535.25 an ounce.
BASE METALS
Base metals have fallen to multi-year lows on worries that a surge in the US dollar could deter producers from making supply cuts in a market battling poor demand, especially in top user China.
London nickel slid more than six per cent to its lowest since 2003 and copper fell three per cent to its cheapest in more than six years. Lead touched its lowest since 2010, while aluminium hit the weakest since 2009.
The US dollar index hit an eight-month high, making dollar-priced metals costlier for non-US investors, ahead of an expected US interest rate rise in December, which could further boost the currency.
Also of concern was the impact of the greenback’s surge on producer output.
“In the context of a market waiting for supply-side cuts, a stronger dollar is only going to weigh on the cost curve and constrain the pace at which cutbacks are made,” said Nicholas Snowdon, analyst at Standard Chartered.
He added that Chinese funds continue to sell metals aggressively on signs of poor demand from downstream sectors that consume metals, and fears that consumption will sag further ahead of the Lunar New Year.
Three-month copper on the London Metal Exchange hit a low of $US4,443.50 a tonne before recovering to end at $US4,490, down 2.0 per cent. Aluminium hit a low of $US1,432.50 before ending down 0.3 per cent at $US1,445.50, while lead hit a low of $US1,551.50 before ending down 1.2 per cent at $US1,575.
LME nickel fell as far as $US8,175 before ending down 5.0 per cent at $US8,300, while zinc hit a session low of $US1,498, having dropped to $US1,487.50 last week for the first time since 2009. It ended at $US1,546, down 0.9 per cent.
Tin ended down 2.0 per cent at $US14,355.
ASX stocks to watch
BBG – BILLABONG: Billabong International has its annual general meeting on Tuesday.
BCI – BC IRON: BC Iron has its annual general meeting on Tuesday.
BKW – BRICKWORKS: Brickworks has its annual general meeting on Tuesday.
HVN – HARVEY NORMAN: Harvey Norman has its annual general meeting on Tuesday.
TWE – TREASURY WINE ESTATES: Treasury Wine Estates managing director Michael Clarke delivers a speech to Australia Israel Chamber of Commerce in Adelaide.
AAP
