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ASX set to open higher and China will launch a third stock exchange

Published: 10:05 03 Sep 2021 AEST

US Federal - ASX set to open higher and China will launch a third stock exchange

The ASX is set to start higher this morning after Wall St posted gains on the back of strong economic data.

Here’s what happened on the markets overnight.

  • SPI futures index was up 17 points, or 0.2%.
  • The Australian dollar was higher at US74.02c.
  • Iron ore was down 2.7% to $139.70 a tonne.
  • Brent oil was up 2% at $US73.03 per barrel.
  • Spot gold was trading near US$1,809 an ounce at the US close.
  • Aluminium was down -0.3% easing from a decade high.
  • Tin was down by 0.3%
  • Lead was up 0.9%.
  • Copper was up 0.3%

Australian market

The ASX 200 closed 0.55% lower on Thursday, down 41.4 points to 7,485.7. Contributing to the fall was an ex-dividend BHP.

Despite this, the ASX is expected to open higher

There also looks to be good news on the front for coal miners. Macquarie Analysts have pointed to thermal and metallurgical coal prices more than doubling in 2021.

In part, this is due to China's unofficial ban on Australian coal, which forced Chinese companies to import North American coal at a premium. The ban, which has been going since October, has now affected global prices.

"The Chinese coal ban on Australian coal saw China pay a premium for North American coal," Macquarie said.

"While this originally depressed the price for displaced Australian coal, the market has since settled, with global pricing balancing higher."

Global thermal-coal and metallurgical-coal demand has outpaced supply.

"This has resulted in thermal-coal prices rising from $US50/tonne in mid-2020 to more than $US170/tonne currently, while met-coal prices have increased from below $US100/tonne in 2020 to over $US260/tonne currently," the analysts said.

Australian indices 

  • ASX 200 fell 0.55% to 7,485.70.
  • ASX24 futures rose 0.2% to 7,478.
  • S&P/ASX Small Ordinaries rose 0.042% to 3,556.90.
  • All Ordinaries was down 0.37% to 7,783.80.

US markets

US stocks were up overnight, buoyed by fresh labour market data (jobless claims dropped) and a trade balance that shows the country’s economic recovery is on track.

The mood was so good that stock prices in New York were heading for record territory.

The much-anticipated August jobs data will drop on Friday. It will be scrutinised by analysts for signs of when the US Federal Reserve might scale back its stimulus program.

“In the wake of last week’s cautious economic assessment from Fed Chairman Jerome Powell, most market watchers aren’t expecting the US central bank to announce its taper plans until its November meeting at the earliest,” said Forex.com analyst, Matt Weller.

“Nonetheless, traders will still key in on Friday’s big jobs report to see if the labour market is recovering as expected or whether further delays may be in the cards.”

US indices

  • Dow Jones rose 0.4% to 35,443.82.
  • S&P 500 rose 0.3% to 4,536.95.
  • Nasdaq rose 0.1% to 15,331.18.

European markets

Wall Street’s strong performance had a positive impact on Europe’s overall sluggish session.

While markets were mostly in the red by close of trade, share prices in London, Frankfurt and Paris found ground. London rose 0.3%, Frankfurt added 0.1% and Paris gained 0.06%.

Helping the Euro market was the surging of shares in Swedish drug maker SOBI. Shares gained 25.8% on a takeover offer from Advent International and Singapore's sovereign wealth fund GIC.

European indices

  • STOXX 600 rose 0.31% to 474.60.
  • German Dax rose 0.1% to 15,840.59.
  • UK FTSE fell 0.4% to 7,163.90.

Watch this space

China is setting up a new stock exchange in Beijing.

The move comes as President Xi Jinping encourages the country’s domestic businesses to list at home, not overseas.

The nation currently has two main exchanges in Shanghai and Shenzhen.

“We will continue to support the innovative development of small and medium-sized enterprises… (by) establishing the Beijing Stock Exchange,” the president said at a trade fair.

China has already tightened rules in several key sectors from entertainment to tech that has already impacted tech giants such as e-commerce platform Ali Baba.

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