The local share market is likely to start its day lower after a sharp fall in oil and iron ore prices, and a mixed performance on Wall Street.
ASX futures are pointing to a 0.1% drop (practically flat).
The Australian dollar lifted to 66.9 US cents (its highest level in two weeks) after some weak economic figures came out, showing US manufacturing activity had fallen for a second straight month.
The soft US data supported speculation the Federal Reserve might cut interest rates this year. However, some investors remain sceptical as inflation remains above the Fed’s 2% target.
On Wall Street, the S&P 500 and Nasdaq gained 0.1% and 0.6% respectively, while the Dow Jones fell 0.3%.
Meanwhile, the pan-European STOXX 600 index gained 0.3%. Investors are expecting the European Central Bank to cut rates on Thursday (local time) by 25 basis points to 3.75%.
Markets are also betting there’s an 80% chance (very high) the Bank of Canada will cut rates at its Wednesday meeting (local time).
Gold, which has risen for four straight months, rose by a further 1% overnight to $US2,351 an ounce.
Oil prices, on the other hand, slumped to a near four-month low after the OPEC+ cartel made a complicated decision on output that could lead to higher levels of supply later in the year (even though demand growth has been slow).
Brent crude futures dropped 3.4% to $US78.36 a barrel (closing below $US80 for the first time since February 7).
On Sunday, OPEC+ (which includes Russia, Saudi Arabia, Iran, Iraq and co) agreed to extend most of its oil output cuts into 2025 — but left room for voluntary cuts from eight members to be gradually unwound from October onward.
On top of that, the price of iron ore fell 4.2% to $US110.65 per tonne (its weakest level in six weeks) on concerns about the outlook for Chinese demand, which has been affected by its long-running property crisis.
Now in its third year, China’s housing slump is impacting the world’s second-largest economy (and its cash-strapped property developers in particular).
So far, China’s various stimulus measures to restore confidence among homebuyers (worried about falling property prices and whether their off-the-plan apartments will ever be completed), have not proven to be effective.