By Monday, 24 July 2017, the Dow Jones Industrial Average was trading at 21,519.78, down 0.28% or 60.29 points. The S&P 500 index was less bearish, at 2,468.12, down 0.18%, while the NASDAQ composite index showed slight gains of 0.04% at 6,390.41.
Across the Atlantic, European bourses continued a bearish trend for the month, with the EuroStoxx 50 PR down 2.34%, the FTSE 100 index down 0.79%, the DAX 30 down 3.94%, and the CAC40 down 2.39% over 1 month. In the land down under, the 200-member S&P/ASX 200 is currently trading at 5,688.071, down 0.61% or 34.770 points. Some 133 members were down on the day, and just 51 members up. Unlike many other global bourses, the year to date return for the Australian Stock Exchange is a paltry 0.39%. The 1-year return is significantly better at 9.48%.
The declines in the Australian stock market are evident across the board. A low of 5,671 was reached early on Monday, before the S&P/ASX 200 rose to 5,688. The All Ordinaries Index retreated 0.66%, or 37.90 points, to close at 5,733.30. The biggest declines were seen in mining stocks. Australia is heavily reliant on mining commodities such as iron ore, gold, copper and the like. Major market players, BHP Billiton tracked approximately 1% lower, Fortescue Metals plunged 2%, and Rio Tinto was approaching the 1% declines.
Slight reversals took place as trading activity continued throughout the day. The current price of BHP Billiton Limited (BHP) is $24.40, down 0.37%, or AUD $ 0.09, while Rio Tinto Limited (RIO) is down 0.68%, or AUD $0.43 at $62.62. The biggest losers on the day include Santos Limited (STO) down 2.15% or AUD $0.07, at $3.19, and Fortescue Metals (FMG) currently down 1.38%, or AUD $0.07 at $4.99.
Losses on the S&P/ASX 200 were not limited to mining stocks. Oil companies also took a big hit. Woodside Petroleum, Santos and Oil Search slid precipitously on the day, and several leading bank stocks also took a hit. These include the National Australia Bank, Westpac, ANZ Banking and Commonwealth Bank. Overall, bank stocks were down between 0.9% and 1.2%.
ECN Capital analyst, Montgomery H. Smyth of Adelaide believes there are some encouraging signs ahead for the AUD/USD pair.
‘…The currency is currently trading at 0.7924 against the greenback, for slight gains on the day. The 52-week trading range of the pair is 0.7161 on the low end, and 0.7985 on the high-end. On Friday, 21 July 2017, the pair plunged after strengthening sharply over a few days. That the AUD managed to close above the critical 0.79 resistance level is a major achievement for the Australian currency.
The next stop is the vaunted 0.80 level against the greenback, and currency traders will be eagerly eyeing that level as a clear sign that bullish sentiment is on the rise. Naturally, there is short-term volatility for the AUD/USD pair, so we may see a pullback towards lower levels in coming days. Any pullback in the exchange rate can be perceived as a buying opportunity for traders. Likewise, any rally is going to entice sellers to dump the AUD and collect their profits.’