Another weak start lies ahead for the ASX today after Wall Street struggled for most of the session but ended with small gains. Gold and oil and iron ore all edged higher.
At 8am, the overnight futures market had an 6 point dip ready for the ASX 200. That was better than the 18 point fall at 7.50 am.
A dip at the start on Wednesday would follow the 0.27% dip at the close on Tuesday.
The Dow rose 60 points, or 0.19%, to 31,068.69, the S&P 500 gained 1.58 points, or 0.04%, to 3,801.19, and the Nasdaq added 36 points, or 0.36%, to 13,072.43.
Oil hit an 11-month high just below $US57 a barrel on Tuesday, thanks to Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.
That’s a delusional view as the pace of lockdown tightenings increases across Europe, Asia (Japan and parts of China in particular), the US and Africa.
Brent crude settled up 92 cents, or 1.7%, at $US56.58 a barrel by after touching its highest level since last February at $US56.75. In New York, West Texas Intermediate (WTI) jumped 96 cents, or 1.8%, to $US53.28.
The key is Saudi Arabia’s plans to cut output by an extra 1 million barrels per day (bpd) in February and March to keep inventories in check. That’s an attempt by the Saudis to try and keep the OPEC + group (really Russia) in the pact that has restrained production.
The Saudis are also trying to anticipate weaker demand in the industrialised countries in the next quarter as the COVID pandemic’s latest wave deepens and economic activity is crimped once again. That’s recognition that the COVID impact is the biggest threat to oil demand, even in China.
Comex copper rose 1.4% to $US3.61 a pound after a couple of days of weakness. Comex silver also edged up to $US25.43 an ounce.
Comex gold futures also edged higher – trading $US5.20 up at 8 am Sydney time at $US1,855 an ounce.
Iron ore prices were mixed – 62% Fe fines delivered to northern China also edged up – just 54 cents- to $US172.67 a tonne, while the price of the 65% Fe fines eased by 10 cents to $US193.60 a tonne.