Monday Market Minutes: Modest Consolidation Expected

By Glenn Dyer | More Articles by Glenn Dyer

The ASX is looking at a modest rise today after Wall Street ended a solid week on a high.

The futures market had the ASX 200 up 6 points at the close on Friday. That was after the ASX 200 slipped 0.1% on Friday to edge away from a 13-month high.

The index still had its best week in nine, adding 2.4% across the four sessions of the post Easter week.

Friday saw the Dow, S&P 500 and Nasdaq enjoy nice rises on the day and the week. the Dow and S&P 500 both ended at new all-time highs on Friday.

The Dow rose 297.03 points, or 0.89%, to 33,800.6, the S&P 500 added 31.63 points, or 0.77%, to 4,128.8 and Nasdaq closed 70.88 points, or 0.51% higher at, 13,900.19.

Wall Street will be tested by new inflation figures tomorrow and the start of the March quarter earnings season on Thursday which is expected to end up better than the 23% to 24% early growth estimates.

European stocks ended nominally higher, but marked their longest winning streak since November 2019 on rising hopes of a rapid economic rebound.

Europe’s STOXX 600 index rose 0.08% on Friday and ended up 0.7% for the week.

MSCI’s gauge of stocks across the globe gained 0.32%.

Emerging market stocks lost 0.97%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.81% lower, while Japan’s Nikkei rose 0.20%.

That saw Japanese fall 0.3% over the last week and Chinese share fell drop 2.4%.

The S&P 500 US rose 2.7% to a new record high helped by strong data, the Dow rose 2% and the Nasdaq ended up 3.1% as megatech stocks returned to vogue among some investors.

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Commodity prices were also mixed after Easter with oil down but metals like copper, gold and iron ore up for the week. The Aussie dollar ended at 76.18, about steady on the pre-Easter levels as the $US fell.

Crude oil prices dropped on rising supply amid a mixed picture on demand recovery from the COVID-19 slump.

US West Texas Intermediate (WTI) crude dipped 0.5% to settle at $US59.32 a barrel in New York, while Brent crude settled at $US62.95 barrel, down 0.4% the day.

For the week WTI fell 3% and Brent was off 2.8%.

US oil and gas rig numbers rose 2 to 432 last week, according to the weekly report from Baker Hughes.

Oil directed rig numbers remained steady at 337, so the rise was in gas rigs.

Gold fell from Thursday’s one-month peak, weighed down by a rebounding dollar and rising Treasury yields.

Comex gold settled at $US1,744,80, down 0.8% on the day but up the same amount for the week.

Comex copper lost ground on the day, settling at $US4.04 a pound, and was up less than 1% for the week.

Iron ore prices rose Friday with the Fastmarkets website of the Metal Bulletin showing a rise of 44 US cents to $US173.54 for 62% Fe fines delivered to northern China. The price of 58% Fe fines lost 49 cents to $US154.47 a tonne.

The price of 65% Fe fines from Brazil rose 50 cents to $US203.10 a tonne.

For the week 62% Fines added $US5.94 a tonne, 58% Fe fines were up 4.28% and the price of 65% Fines continued to rise faster than the two other grades with a $US6 a tonne rise.

US Treasury yields rose in the wake of a report showing US producer price inflation accelerated last month.

The yield on the 10-year T-bond notes ended at 1.66% on Friday, down from 1.73% earlier in the week.

That will be tested by the consumer price index data for March which is expected to show a big rise.

The producer price index jumped 1.0% last month after rising 0.5% in February.

In the 12 months to March, the PPI surged 4.2%. That was the biggest year-on-year rise since September 2011 and followed a 2.8% annual rise in February.

The kick up in the PPI didn’t impact commodities or equities.

This week’s US Consumer Price Index might, though, if it shows another rise above an annual rate of 2% (2.5% has been tipped, up from 1.7% in February).

But core inflation will also rise but remain below the 2% level (it was an annual 1.3% in February).

That’s like to get investors threatened but the Fed continues to argue this increase will be transitory because of what is called the ‘base effect’ of weak months a year ago dropping out of the comparison.

 

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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