So much for the impact of the weak Chinese manufacturing survey yesterday – it rattled local markets briefly but the Aussie market was higher by the end of the day after starting out lower. The Aussie dollar fell around a third of a cent on the news of the slower than expected data, but then bounced sharply overnight in offshore trading to hit new 2014 highs in the US.
The currency benefited from a weaker US currency, especially against the euro, but that did not help gold which it normally does. Comex gold futures prices in New York fell 1.9% to around $US1,311 an ounce (it touched a day’s low of just over $US1,308 an ounce).
It was trading around 91.32 US cents in early Asian trading this morning after earlier hitting 91.50 US cents.
The strong rebound overnight continues the unusual resilience of the currency in the last month – it is resisting virtually every bid of bad or indifferent news to remain in the narrow band of 89 to 92 US cents.
It means that slowly but surely the gains (from a lower currency) in late 2013 and earlier this year, are being whittled away.
AUDUSD 1Y – Stubborn A$ makes 2014 high
Wall Street weakened and our market will start the day on a weaker note with share price futures showing a 33 point fall in offshore trading this morning.
Driving gold prices lower was the continuing suggestion of a US rate rise next year – but that should have supported the US dollar in trading, but didn’t, so that reasoning is suspect.
Comex silver futures for May delivery fell 1.2% to $20.067 an ounce. The price dropped for the sixth straight session, the longest slump in almost a year.
Last week the metal fell 5.2%, which was much larger than gold’s 3.1% fall.
The fall for gold has cut the year’s gains to 8% – still better than Wall Street where the market is either square on the year, or a touch lower.
Last week’s fall in the gold price was the biggest since late last November – if the fall overnight is repeated this week, it will be another miserable week for goldbugs, who only a fortnight ago were boasting about the golden start to the year for their favourite metal.
On Wall Street, stocks bounced off session lows but still finished the day’s trading lower.
The losses followed the small drop on Friday.
The S&P 500 ended the day 9.08 points, or 0.5%, lower at 1,857.44.
The Dow Jones Industrial Average shed 26.08 points, or 0.2%, to 16,276.69.
But the standout loser was the Nasdaq where the Composite index finished the day 50.40 points, or 1.2%, lower at 4,226.39.
The tech-rich index had been down 2% during the day’s trading.
Biotech stocks took another hammering on fears the sector is overpriced with investigations and probes into the pricing of some key drugs emerging.
Tech stocks were weaker on the whole as well.
In fact market data shows that around 80% of the stocks traded on the Nasdaq were lower.
With continuing concerns the tech sector is too frothy and over valued, the falls on the Nasdaq on Friday and overnight might be an early signal of a correction, which could drag the wider market lower.
Earlier, Europe took losses, but Asian markets took the weaker Chinese data in their stride and ended higher.
The local market added 8.8 points or 0.2%, to end at 5346.9, on the ASX 200.
