A rising US dollar helped push oil to its lowest level in four weeks

A weak night on commodity markets looks likely to limit Australian share gains ahead of today’s rate decision, despite a rebound in US stocks. 

ASX SPI200 index futures edged up a modest five points or less than 0.1 per cent to 6687 ahead of the start of a new quarter. The benchmark index, the ASX 200, sealed a third straight winning quarter despite a late dive of 28 points or 0.4 per cent yesterday as money managers rebalanced portfolios in the final minutes of trade. The index put on 70 points or 1.1 per cent during a volatile three months. 

The new quarter will start with mixed leads. A rising US dollar helped push oil to its lowest level in four weeks and gold to a two-month low. Copper and most base metals also declined. Market heavyweight BHP sank in overseas trade despite a rise in iron ore. 

US stocks rebounded from three-week lows as the White House played down reports the administration was considering blocking US investment into China. A US Treasury official denied the White House was considering blocking Chinese companies from listing in the US “at this time”. A trade adviser dismissed as “fake news” reports that the administration was considering delisting Chinese companies. Sentiment was also helped by yesterday’s unexpected lift in Chinese economic data. Factory and services activity gauges both came in ahead of expectations. 

The S&P 500 put on 15 points or 0.5 per cent as Apple led a surge in tech stocks. The Nasdaq outperformed the other major indices with a rise of 60 points or 0.75 per cent after Apple CEO Tim Cook told a newspaper that the latest iPhone was selling well. The Dow added 97 points or 0.36 per cent.

The S&P 500 and Dow both gained roughly 1 per cent during a quarter that saw sharp falls in August as the bond yield curve inverted and weak economic data underlined the impact of the trade war with China. Trade talks are set to resume next week. 

The sugar hit from drone attacks on Saudi Arabia continued to wear off in the oil market. US crude settled at its lowest level since September 3 following reports that Saudi Aramco has restored full production that was lost to the attacks. Texas Intermediate crude settled $1.84 or 3.3 per cent lower at $US54.07 a barrel. The international benchmark, Brent crude, settled $1.13 or 1.8 per cent in the red at $US60.78 a barrel, the weakest close since September 13.

Strength in the greenback and a general rotation towards risk assets sent gold to its weakest finish since the second day of August. Gold for December delivery slumped $33.50 or 2.2 per cent to settle at $US1,472.90 an ounce. 

A solid rise in iron ore yesterday did not translate into solid gains for the big two Australian miners. BHP’s US-listed stock shed 0.78 per cent and its UK-listed stock 1.28 per cent. Rio Tinto gained 0.21 per cent in the US, but lost 0.95 per cent in the UK. The spot price for ore landed in China rallied 1.9 per cent or $1.70 to $US93.20 a ton.

The London Metal Exchange saw some sharp moves ahead of the week-long Golden Week public holiday in China. Zinc and lead rallied 3.4 per cent. Copper dropped 0.7 per cent, aluminium 0.9 per cent, nickel 0.7 percent and tin 1.2 per cent. 

On currency markets, the dollar slipped a quarter of a cent to 67.48 US cents. 

No question what today’s big-ticket event is: the Reserve Bank meets this morning and is expected to announce a 25 basis points cut to the cash rate at 2.30pm Eastern Standard Time. The latest odds on a cut were steady this morning at 78 per cent. Chinese markets are on holiday for the next week. Wall Street has manufacturing and construction reports scheduled tonight.