Volatility up, oil prices fall: ASX to slide on open

Market Reports

by David Chau

The Australian share market is set to open lower this morning, due to weak leads from US markets.

The last few days has been a bit like a ‘yo-yo’ for Wall Street. On Friday, there was a huge sell-off as investors reacted to hawkish comments made by Boston Fed President, Eric Rosengren. But on Monday, Fed governor, Lael Brainard, made dovish comments, warning against raising rates too quickly and the US markets rebounded.

Overnight, Wall Street fell again as investors digested a sharp rise in volatility. The CBOE Volatility Index, which measures fear in the US market, shot up 23 percent to a reading of 18.61.

Investors are also concerned about falling commodity prices (particularly oil, which fell again overnight). The International Energy Agency said in its market update that global oil demand growth is slowing at a faster rate than expected, and it will take "a while longer" for markets to rebalance.

Markets

Wall Street closed lower overnight: The Dow Jones lost 1.4 per cent to close at 18,067, the S&P 500 was down 1.5 per cent to close at 2,127 and the NASDAQ slipped 1.1 per cent to close at 5,155.

European markets also finished lower: London’s FTSE dropped 0.5 per cent, Paris fell 1.2 per cent and Frankfurt lost 0.4 per cent.

Asian markets were mixed: both the Nikkei was up 0.3 per cent, whereas the Hang Seng dropped 0.3 per cent, and the Shanghai Composite rose by 0.1 per cent.

The Australian share market closed lower yesterday: The S&P/ASX 200 Index closed 12 points down to finish at 5208. And on the futures market, this morning the SPI is down 10 points.

Currencies

The Australian Dollar at 7:20AM was buying $US74.66 cents, 56.61 Pence, 76.58 Yen and 66.58 Euro cents.

Local economic news

Later today, the Westpac-Melbourne Institute will release the results of its Consumer Sentiment survey for September.

Company news

Paragon Care Ltd (ASX:PGC) is set to purchase Electro Medical Group Pty Ltd for $3.9 million. Paragaon Care is a Melbourne-based company which owns businesses in the healthcare sector. While Electro is a company which specializes in providing service support and technology management to the medical, allied health and aged care industries. Paragon expects the transaction to settle in the coming weeks. Shares in Paragon closed steady at 81 cents.

Superloop Ltd (ASX:SLC) has entered into a scheme implementation deed with BigAir Group Ltd (ASX:BGL). Superloop owns and operates fibre networks in the Asia Pacific – and is active in Australia, Singapore and Hong Kong. While BigAir owns and operates metropolitan fixed wireless broadband networks across Australia and provides cloud solutions to mid-sized companies. Under this deed, it’s proposed that Superloop will acquire all the shares in BigAir. Financial close is expected in December, and will be subject to BigAir shareholder approval, court approval and other necessary conditions precedent. Shares in Superloop closed 0.3 per cent higher at $3.31.

Commoditiy prices

Gold has dropped $1.90 to $US1,324 an ounce.
Silver has lost $0.02 to $18.98.
Copper is steady at $2.10 a pound.
Oil is down $1.36 to $US45.48 a barrel.

Ex-dividends

David Chau

Finance News Network
David joined FNN in April 2016. In addition to presenting the Market Outlook and latest business news stories, David interviews senior economists and CEOs of ASX-listed companies. Prior to working for FNN, David was a litigation lawyer.