ASX off to a slow start as gold, oil prices fall; Wall Street drifts

2 months ago 35

The Australian sharemarket is set for a lacklustre start to trading after US stocks wavered overnight as traders digested mixed economic data and took stock of shifting geopolitical risks amid a flurry of social media posts from President Donald Trump.

ASX futures slipped 7 points to 8677, pointing to a muted open when trading starts this morning. The bourse eked out a small gain on Wednesday, continuing its sluggish start to the new year, with the S&P/ASX 200 edging up 0.2 per cent. The Australian dollar was down 0.3 per cent at US67.19¢ as of 8.28am AEDT.

BlueScope Steel will again be in the spotlight after the nation’s largest steelmaker knocked back a $13 billion takeover bid by Kerry Stokes’ industrial group SGH and US steel giant Steel Dynamics last night, dismissing it as “an attempt to take BlueScope from its shareholders on the cheap.” On the economic front, investors will be looking to the balance of trade for November, to be released at 11.30m AEDT. Australia’s trade surplus widened to $4.39 billion in October after a jump in gold exports as central banks and investors around the globe flock to the safe haven asset.

Mining heavyweights could be bolstered by a surge in the price of iron ore, which has hit the highest level since February, buoyed by hopes for rate cuts in China and restocking before the Lunar New Year holiday. However, copper slid from its record high as traders booked profits from a swift run-up in prices, and gold and silver prices also declined.

On Wall Street overnight, optimism faded after a series of social media posts from the US president sent homebuilders and defence contractors tumbling. Valero Energy led shares of refiners higher after Trump said Venezuela would turn over millions of barrels of oil to the US.

The S&P 500 Index slid 0.4 per cent after notching its second intraday record of 2026, while the Nasdaq 100 edged up 0.2 per cent. The Dow Jones Industrial Average dropped 0.9 per cent from its own record set the day before.

US homebuilders fell sharply after Trump suggested moves to prevent large institutional investors from buying single-family homes, hoping to make it more affordable for people to buy houses. The potential removal of some buyers for homes sent the stock price of D.R. Horton down 3.1 per cent, and could also affect Australian building products maker James Hardie, which makes three quarters of its sales in the US.

Investment giant Blackstone briefly slumped more than 9 per cent on the news, but it quickly pared its loss to a drop of 5.6 per cent. Apollo Global Management dropped more 5.5 per cent.

Northrop Grumman also slid 5.5 per cent and Lockheed Martin lost 4.8 per cent after Trump said he would not permit dividends or stock buybacks for defence companies until they fix problems with the production of military equipment. He didn’t mention specific companies.

Nvidia and Microsoft rose about 1 per cent each, and Alphabet rose more than 2 per cent as investors shifted back into AI stocks following recent worries they were overvalued.

“Investors have come into 2026 with a similar playbook to last year: Buy tech and forget about it. Rumors that the AI trade was done turned out not to be true,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Moves across the rest of the US stock market were mostly quiet, including for Warner Bros Discovery after it again rejected a buyout bid from Paramount and told its shareholders to stick with a rival offer from Netflix. Warner Bros rose 0.3 per cent, while Paramount Skydance fell 0.9 per cent and Netflix added 0.1 per cent.

In the oil market, crude prices fell after Trump said that Venezuela would provide 30 million to 50 million barrels of oil to the United States. A barrel of benchmark US crude dropped 2 per cent to $US55.99. Brent crude, the international standard, fell a more modest 1.2 per cent to settle at $US59.96 per barrel.

Any additional oil flowing from Venezuela into the global system would push down on crude prices by increasing their supplies. Prices for oil have swung this week following Trump’s weekend ouster of the president of Venezuela, which is likely sitting on some of the largest deposits of oil in the world.

Oil prices had already fallen back to where they were in 2021, before Trump’s move against Venezuela, because of expectations of plentiful supplies. To pull much more oil from Venezuela’s ground would likely require big investments to improve ageing infrastructure.

In the bond market, Treasury yields swung following several mixed reports on the US economy. One of the most impactful said that growth for US retailers, finance companies and other businesses in the services sectors accelerated by more last month than economists expected.

Separate reports on the US job market offered a mixed view. One said that employers cut back on the number of job openings they were advertising, while a second suggested that employers outside of the government added 41,000 more jobs last month than they cut. A much more comprehensive look at the health of the US job market will arrive on Friday.

The yield on the 10-year Treasury fell to 4.13 per cent from 4.18 per cent late on Tuesday following Wednesday’s economic reports. But the two-year yield, which more closely tracks expectations for what the Fed will do, held steadier. It edged down to 3.46 per cent from 3.47 per cent from late Tuesday.

The hope on Wall Street is that the economy remains solid enough to avoid a recession but not so strong that it keeps the Fed from cutting interest rates. The Fed cut its main interest rate three times last year to shore up the slowing job market, but it’s indicated fewer cuts may be ahead because inflation remains high.

Traders are betting on a less than 12 per cent chance that the Fed will cut interest rates at its next meeting later this month. That’s down slightly from the day before, according to data from CME Group.

In stock markets abroad, indexes were mixed among some sharp moves across Europe and Asia.

with AP and Bloomberg