Australian shares are expected to dip on opening today as the price of iron ore continues to decline, while Wall Street indices spent most of the day in negative territory.
- Australian shares are set to slip on Friday after iron ore prices fall 6 per cent
- From $US230 a tonne in May, the iron ore price has dropped to below $US100 a tonne
- The tech-heavy Nasdaq closed higher on Wall Street
At 6:49am AEST, Australian futures trading were down 0.4 per cent, to 7.439.
The Australian dollar lost 0.5 per cent and was worth 72.93 US cents.
Meanwhile, the S&P 500 closed 0.2 per cent lower, at 4,473, the blue-chip Dow Jones Industrial Average also ended the day 0.2 per cent lower, at 34,751. The tech-heavy Nasdaq Composite gained 0.1 per cent, to close at 15,181.
Iron ore takes a hit
The price of iron ore has continued its decline, dropping to below $US100 a tonne after hitting a high of $US230 a tonne in May.
Overnight, iron ore tumbled by US$6.90, or 6.1 per cent, to $US106.50 per tonne, according to CBA.
It comes as demand for Australia’s biggest export slows in China.
As a result, Rio Tino lost 4.4 per cent in New York and 4 per cent in London while BHP fell 3.3 per cent on Wall Street and in London.
Retail sales up, jobless claims down
More broadly, US investors responded to mixed economic data on retail sales and jobless claims and rising US government bond yields.
The number of first-time applicants for unemployment benefits came in at 320,000, or 20,000 more than the previous week.
Retail sales rose 0.7 per cent in August, on the back of stronger online purchases.
Amazon stocks gained 0.3 per cent, clothing company Gap closed 1.5 per cent higher, online marketplace Etsy rose by 3 per cent.
“Looking at today, clearly we had positive news from retail sales and it looks as if the massive slowdown in the economy is not materialising as a lot of people expected,” said Ryan Detrick, senior market strategist at LPL Financial.
Energy stocks down
Energy stocks tumbled after oil prices cooled following Wednesday’s surge as threats to the Gulf of Mexico from Hurricane Nicholas lessened.
The benchmark Texas crude oil dropped 0.4 per cent, to $US72.58 a barrel, while Brent crude oil gained 0.25 per cent, to 75.63 a barrel.
Spot gold was worth down 2.3 per cent, to $US1,752 an ounce.
The yield on 10-year US Treasury bonds was up 2 basis points, to 1.324 per cent.
The two-year US Treasury bond yield was up 0.6 basis points, at 0.219 per cent.
In European markets, the STOXX 600 index gained 0.4 per cent, to sit at 465.9, Germany’s DAX closed almost a 0.25 per cent higher, at 15,651, and Britain’s FTSE rose 0.16 per cent, to 7,027.