- The Australian sharemarket is poised to rise at the open this morning.
- Tensions between the US and China continue to simmer.
Sandfire to restart drilling in Botswana
Sandfire Resources is set to resume exploration activity in Botswana by early June after the government announced a phased ending of COVID-19 restrictions.
The company said plans are underway for a staged restart of exploration activity that should see resource drilling at its A4 discovery resume in the next few weeks.
The company also said it had executed a binding agreement with Australian explorer Kopore Metals to acquire a ~6,700 km² land package in Namibia.
The licences for the package are located immediately along strike to the west of Sandfire’s Tshukudu licences in Botswana and cover a large, underexplored area within the western part of the Kalahari Copper Belt.
China weighs on commodity prices
Oil, iron ore and base metal prices all fell over the weekend, with China driving the weakness across most markets.
Crude oil sank, with Brent crude down 2.6 per cent to $US35.13 a barrel on Friday as doubts lingered about China’s demand for the rest of the year.
Base metals were also broadly weaker.
“Increased tensions between the US and China weighed on sentiment after China introduced new security legislation impacting Hong Kong,” said NAB head of commodity research Lachlan Shaw.
China headwinds put recovery at risk
The highs recorded on sharemarkets in Australia and overseas last week could come under threat in the coming days, as relations between the world’s two largest economies rattle optimism and threaten another sell-off in shares.
In addition to central bank and government stimulus, the rally was fuelled by reported progress on a vaccine and the ongoing wind-back of restrictions, which has seen commodity prices rise as economic activity lifts from historical lows.
But investors’ nerves were tested towards the end of the week as tensions between the US and China were again thrown into the spotlight after officials in Washington rebuked Beijing for national security laws viewed as a threat to the autonomy of Hong Kong.
“As someone who’s lived in the Asian time zone for almost 40 years now, the move in Hong Kong is quite a serious issue,” said Federation Asset Management adviser and former Merrill Lynch executive, Greg Bundy.
“There’s been a handful of stocks that have led the US recovery,” Mr Bundy added, referring to Facebook, Apple, Amazon Netflix and Alphabet.
“If any of those stocks faced any retaliation from the Chinese Communist Party … you would probably see … a 5 to 10 per cent sell-off pretty quickly.”
Stocks mixed; gold firms
Here are the weekend market highlights:
- AUD -0.4% to 65.37 US cents (Year to date: -6.9%)
- On Wall St: Dow flat S&P 500 +0.2% Nasdaq +0.4%
- In New York: BHP -0.1% Rio +0.6% Atlassian +1.3%
- In Europe: Stoxx 50 flat FTSE -0.4% CAC flat DAX +0.1%
- Spot gold +0.4% to $US1734.68 an ounce in New York
- Brent crude -2.6% to $US35.13 a barrel
- US oil -2% to $US33.25 a barrel
- Iron ore -0.6% to $US97.65 a tonne
- Dalian iron ore -0.1% to 722 yuan
- LME aluminium -1.3% to $US1502 a tonne
- LME copper -1.9% to $US5287.50 a tonne
- 2-year yield: US 0.17% Australia 0.24%
- 5-year yield: US 0.33% Australia 0.38%
- 10-year yield: US 0.66% Australia 0.86% Germany -0.49%
Good morning and welcome to Markets Live for Monday.
This blog is not intended as investment advice.