Easing iron ore price may hamper dollar

·4-min read

Investors have watched falling commodity prices continue to bring down materials shares on the Australian share market, as they prepared for the Aussie dollar to follow.

Iron ore prices fell to about $US200 per tonne after recently being as high as about $US240 per tonne, which had dire consequences for some.

Materials shares were the biggest losers and dropped more than one per cent.

BHP lost 1.84 per cent to $46.87. Fortescue dropped 4.17 per cent to $21.37. Rio Tinto shed 2.15 per cent to $119.50.

Materials shares have boomed in the last 12 months as Chinese steel-makers rebounded from the pandemic and ordered more and more iron ore.

However Chinese government officials last week said they would try and lower soaring commodity prices for the benefit of their economy.

Deep Data Analytics chief executive Mathan Somasundaram said there was little conviction in trade on the ASX on Monday as investors were probably concerned.

"I would assume the iron ore price is going to weaken more over the next couple of weeks," he said.

Healthcare shares were the standouts and rose 1.49 per cent.

Market giant CSL climbed 1.75 per cent to $289.27. ResMed increased 3.5 per cent to $26.88.

Mr Somasundaram said global fund managers were buying health shares due to the falling commodity prices.

Falling commodity prices would weaken the Aussie dollar lower, Mr Somasundaram said.

However some of the big healthcare providers trade in US dollars and would benefit from any Aussie dollar slide, he said.

The contrasting fortunes of materials and health shares meant the benchmark S&P/ASX200 index closed up by 15.6 points, or 0.22 per cent, to 7045.9.

The All Ordinaries closed higher by 10.7 points, or 0.15 per cent, to 7276 points.

US markets on Friday had a similarly stagnant performance.

Mr Somasundaram said the ASX's lacklustre showing may also be due to investor nerves about Bitcoin's falls and how it will relate to US tech giants.

Bitcoin fell 13 per cent on Sunday after Beijing stepped up efforts to crack down on Bitcoin mining and trading.

Mr Somasundaram said some big technology companies like Tesla had money in the cryptocurrency.

He said investor sentiment for Bitcoin could also flow to the giant US tech sector.

"Bitcoin is the poster child for speculative tech," Mr Somasundaram said.

On the ASX, buy now, pay later provider Zip is expanding to Europe and the Middle East after agreeing to buy two companies for $160 million.

Zip will buy European firm Twisto Payments for $140 million and emerging payments provider Spotii of the Middle East for $20 million. Both are buy now, pay later providers.

Shares were up 0.85 per cent to $7.10.

In banking, Commonwealth bank shares set a record price of $99.16.

They closed better by 0.72 per cent to $98.76.

Synlait milk fell 5.69 per cent to $2.82 after it said a loss was expected this financial year.

Company leaders expect a net loss after tax of between $20 million and $30 million.

They had forecast the company to break-even.

The decline is due to shipping delays and competition on pricing.

Telecommunications provider TPG fell 2.58 per cent to $4.91 after revealing hackers accessed the data of two customers.

The hackers penetrated a TPG cloud-based hosting service.

The company said the technology used to provide this service is separate to that of its telecommunications networks.

The Australian dollar was buying 77.36 US cents at 1726 AEST, lower from 77.57 US cents at Friday's close.


* The benchmark S&P/ASX200 index closed up by 15.6 points, or 0.22 per cent, to 7045.9 on Monday.

* The All Ordinaries closed higher by 10.7 points, or 0.15 per cent, to 7276 points.

* At 1726 AEST, the SPI200 futures index was up 9 points, or 0.13 per cent, to 7055.


One Australian dollar buys:

* 77.36 US cents, from 77.57 cents on Friday

* 84.11 Japanese yen, from 84.24 yen

* 63.46 Euro cents, from 63.32 cents

* 54.64 British pence, from 54.62 pence

* 107.75 NZ cents, from 107.87 cents.