ASX set for a slow start to the week after mixed leads

The Australian sharemarket is set for a lacklustre start to the trading week following mixed overseas leads.

The Australian sharemarket is tipped for a lacklustre start on Monday. Picture: NCA NewsWire/Joel Carrett

The Australian sharemarket is set for a lacklustre start to the trading week following mixed overseas leads, with iron ore producers likely to come under pressure.

SPI futures are pointing to a decline of five points at the start of trade following less-than-inspiring finishes on US and European bourses at the end of last week and a further decline in the iron ore price.

“The iron ore producers, Rio and BHP, both lost ground in European trade on Friday, so they‘ll probably weigh on the Australian market at the start of trade,” CommSec chief economist Craig James said.

Mining stocks were among the worst performers on the ASX on Friday, with the iron ore price building on its recent retreat.

Rio Tinto fell 0.93 per cent to $122.12, while BHP declined 1.1 per cent to $47.75 and Fortescue gave back 2.24 per cent to $22.30.

While the iron ore price comes under pressure — it dropped a further 5 per cent, or $US10.75 at the end of last week — the oil price has been moving higher, which could provide a reprieve for the oil majors on Monday after their disappointing finish last week.

Like the iron ore majors, oil producers saw big declines in Friday’s trade. Woodside Petroleum retreated 3.35 per cent to $21.61, Oil Search slipped 2.42 per cent to $3.63 and Santos slumped 4.76 per cent to $6.61.

“A hurricane looks to be forming in the Gulf of Mexico, so that could disrupt production. That saw the Nymex up by $US1.64 or 2.6 per cent (on Friday),” Mr James said.

In the US, the Dow Jones finished Friday’s session in positive territory, up 0.36 per cent to 34,207.84, but the S&P 500 and Nasdaq both ended in the red: the S&P 500 dipped 0.08 per cent to 4155.86, while the Nasdaq fell 0.48 per cent to 13,471.

European markets were also mixed as data indicated inflation is on the rise. The composite purchasing managers index for the eurozone, released on Friday, showed it was accelerating at the fastest pace in three years.

“That raises concerns about inflation bubbling higher but for the moment, at least, investors aren’t focused on that,” Mr James said.

The local sharemarket closed out last week slightly higher as volatility hit resources stocks.

The S&P/ASX 200 finished up 10.7 points at 7030.3, while the All Ordinaries Index gained 12.7 points to 7265.3. Over the week the S&P/ASX 200 rose 0.23 per cent.