ASX 200 to fall at open; oil, iron ore prices sink

The Australian share market is expected to start the week on a muted note following mixed closing on Wall Street last Friday. The domestic market is likely to extend losses from its biggest weekly drop since March 2020 on Friday as investors panic that aggressive-monetary policies tightening could pull the global economy into recession.

According to the latest SPI futures, the ASX 200 is likely to open 19 points or 0.3% lower on Monday. On Friday, the benchmark index fell 1.75% to 6,474.8 points.

In addition, a rebalance of the ASX 200 index would take effect today. Appen Ltd (ASX:APX) and PolyNovo Ltd (ASX:PNV) would be removed from the index, while Brainchip Holdings Ltd (ASX:BRN) and Core Lithium Ltd (ASX:CXO) would be added to the benchmark index.

On Wall Street, the Dow Jones was down 0.1%, the S&P 500 was up 0.2%, and the NASDAQ rose 1.4%.

For the week, the S&P 500 dropped 5.8%, also its biggest fall since the third week of 2020.

After sharp early losses, world stocks steadied somewhat to ending Friday’s session down by just 0.12%. The weekly slide of 5.8% was the steepest since the week of March 20, 2020.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell to a five-week low, dragged by selling in Australia. Japan’s Nikkei fell 1.8% and headed for a weekly drop of almost 7%.

Bond yields

  • 10-year yield: US 3.23%, Australia 4.13%, Germany 1.65%

US Dollar Futures Index increased by 0.97% to US$104.422.

Oil prices fall

Oil prices tumbled about 6% to a four-week low on Friday on worries that interest rate hikes by major central banks could slow the global economy and cut demand for energy.

  • Brent crude futures fell 5.6%, to settle at US$113.12 a barrel.
  • WTI crude fell 6.8%, to settle at US$109.56.


Gold price tank

Gold prices ended lower as a stronger dollar and interest rate hikes from major central banks dented the safe-haven metal’s appeal.

  • Gold was off 0.8% at US$1,841.13 an ounce, weighed down by a firmer dollar.

Meanwhile, Dalian iron ore extended losses to a sixth session on Friday, marking its steepest weekly slump in four months, as Chinese steel mills opted to reduce output amid weak profits and deteriorating demand prospects.

The most-traded iron ore, for September delivery, on China’s Dalian Commodity Exchange ended 5.9% lower at 821.50 yuan (US$122.64) a tonne, after earlier tumbling to 815.50 yuan, the lowest since 26 May 2022.

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