The S&P/ASX 200 index (XJO) had its worst close since mid-June on Tuesday, finishing at 5784 points, down 38 points on the day.
Volatility in overseas equities markets was always going to wreak havoc with our financial sector which is a significant swing factor in the broader index performance.
Exacerbating the negative trends felt in that sector were falls of about 2% across the Materials and Energy indices, triggered by commodity price weakness across iron ore, gold and oil.
While oil has stabilised, iron ore took another hit overnight, gold fell further and there were across the board declines in base metals, suggesting mining stocks could receive another hit today.
However, with overseas markets recovering overnight, and particularly good gains made in the US, the ASX SPI200 index is up 60 points to 5831 points.
Given the increasingly dire coronavirus situation in the UK, reflected in only a moderate recovery in European markets, it could be argued that the quantum of our rebound indicated by the futures index is a little too optimistic, particularly if the big miners place a drag on the index.
The Stoxx 600 arguably gives a better indication of sentiment in the European region, rather than looking at a handful of individual indices.
It was up 0.2% to 357 points overnight, but in France the CAC 40 underperformed the broader region, shedding 19 points to close at 4772 points.
The DAX was one of the stronger performing indices, gaining 0.4% or 52 points to close at 12,594 points.
While the FTSE 100’s gain of 25 points or 0.4% was robust in the circumstances, looking at the bigger picture, the index has lost 200 points since Friday.
It is a similar story in the US with the Dow’s gain of 140 points hardly representing a material recovery in the context of the previous day’s fall of 510 points.
The S&P 500’s gain of 34 points or 1% inspired a little more confidence, but once again it was the NASDAQ that stood strong.
Having given little ground on Monday, the NASDAQ soared 184 points or 1.7% to close at 10,963 points.
On the commodities front, gold briefly slipped below US$1900 per ounce before closing at US$1907 per ounce.
Iron ore continued its steep decline, falling more than 2% to approximately US$117 per tonne.
After pushing up above US$42.00 per barrel, the Brent Crude Oil Continuous Contract tapered off later in the day to close at a respectable US$41.72 per barrel.
All base metals trended lower with zinc one of the hardest hit as it fell by about 3% to US$1.10 per pound.
Nickel was also weak, recording its fourth consecutive day of losses to close at US$6.58 per pound, a level it hasn’t traded at since mid-August.
The Australian dollar continued its slide against the US dollar, plateauing at around US$0.716, down 2.2% since Monday.