Trump tricks traders, but futures suggest ASX will turnaround on Monday
If markets are right we should avoid further downside on Monday.
The Trump news that triggered a substantial sell-off on the ASX on Friday, had a much more nominal impact on overseas markets on Friday night our time.
The S&P/ASX 200 index (XJO) shed 81 points on the day on Friday, but it was only in the last hour or so that the decline really accelerated with the index falling by about 62 points in that period.
On a week-on-week basis the close of 5792 points represented a decline of 173 points or nearly 3%, and it is worth noting that a break below 5784 points would have taken the XJO back to its worst close since mid-June.
If markets are right we should avoid further downside on Monday with the ASX SPI200 index up more than 1% or 67 points to 5853 points.
European markets were particularly resilient with the FTSE 100 gaining 22 points or 0.4% to close at 5902 points.
In France, the CAC 40 was relatively flat, while in Germany the DAX only gave up 0.3%, closing at 12,689 points.
While US markets felt the pinch more, it wasn’t a shockwave response with the Dow falling 0.5% to close at 27,682 points.
The NASDAQ was the main casualty, as it shed 251 points or 2.2% to close at 11,075 points.
To put this in perspective though, the index had rallied from about 11,000 points to 11,300 points throughout the week, and it could be argued that this was a bit of money taken off the table in the form of profit-taking.
Another key barometer of investor sentiment when there is a major event is the gold price.
There wasn’t a flock to gold – in fact, it finished slightly lower on the day at about US$1907 per ounce.
The last few days of the week weighed heavily on the oil price with the Brent Crude Oil Continuous Contract finishing at US$39.27 per barrel, down from US$43.00 per barrel on Monday.
In after-hours trading the commodity traded below the US$39.00 per barrel mark, a worrying sign as it hasn’t fallen below that level since June.
Elsewhere on the commodities front, copper reclaimed much of the lost ground from Thursday when it fell by more than 3% to US$2.90 per pound.
Nickel, zinc and lead all trended slightly lower.
Author: Trevor Hoey
Oct 05, 2020
Former senior writer for AFR, Trevor Hoey provides incisive commentary on ASX developments, particularly focusing on the emerging companies market segment.