Australian stocks have opened as investors worry that the aggressive tightening of monetary policy could lead the global economy into recession.
Key points:
- ASX 200 suffered its worst week last week since COVID
- The Dow Jones Industrial Average was down 0.13%, the S&P 500 was up 0.22% and the Nasdaq Composite was up 1.43%.
- The pan-European STOXX 600 index rose 0.1% in volatile trading, but ended 4.6% lower last week.
ASX 200 was flat at 6,474 at 10:24 a.m. AEST.
At the same time, the Australian dollar rose to 69.49 US cents.
All 11 sectors were lower over the past week. Although not much has changed, the consumer commodities sector was the best performer in the early trades. It has dropped 3% in the last five days.
Pointsbet (+ 11.2pc), Harvey Norman (+ 4.8pc) and Home Consortium (+3.6pc) were the best.
Meanwhile, Bega Cheese (-6.9pc), De Gray Mining (-6.1pc) and Beach Energy (-5.9pc) were the worst performers.
Brent crude rose to $ 113.77 a barrel at 10:31 a.m. AEST.
The biggest weekly loss since 2020
Global equities closed their sharpest weekly drop since the March 2020 pandemic on Friday, as investors feared tighter monetary policy by inflation-fighting central banks could hurt economic growth.
The largest US Federal Reserve rate hike since 1994, Switzerland’s first such move in 15 years, a fifth rise in British rates since December and a European Central Bank initiative to bolster the indebted South , all brought about changes in the markets.
The Bank of Japan was the only one atypical in a week in which monetary prices rose around the world, staying on Friday with its strategy of fixing yields at 10 years close to zero.
After heavy early losses, global stocks stabilized slightly to end Friday’s session down just 0.12 percent.
The 5.8 percent weekly slide was the sharpest since the week of March 20, 2020.
The Wall Street Dow Jones Industrial Average was down 0.13%, the S&P 500 was up 0.22% and the Nasdaq Composite was up 1.43%.
During the week, the S&P 500 fell 5.8 percent, also its biggest drop since the third week of 2020.
“Inflation, war and confinement in China have derailed the global recovery,” Bank of America economists said in a note to customers, adding that they see a 40% chance of a recession in the United States. next year as long as the Fed continues to rise. rates.
“We expect GDP growth to slow to almost zero, inflation to dry out around 3% and the Fed to raise rates above 4%.
The Fed said Friday that its commitment to fighting inflation is “unconditional.” Fears that their rate hikes could lead to a recession supported Treasury prices and slowed rising yields, which fall as prices rise.
Ten-year Treasury yields fell to 3.22944% after reaching an 11-year high of 3.498% on Tuesday.
“The momentum of global central bank policy is one-way”
Southern European bond yields fell sharply following more detailed reports from ECB President Christine Lagarde on central bank plans.
“The more aggressive line of central banks increases headwinds for both economic growth and equity,” said Mark Haefele, investment director at UBS Global Wealth Management.
“The risks of a recession are rising, while getting a soft landing for the US economy seems increasingly difficult.”
In Asia, the broader Asia-Pacific stock index outside of Japan fell to a five-week low, dragged down by sales in Australia.
Japan’s Nikkei fell 1.8 percent and headed for a weekly drop of nearly 7 percent.
Bonds and coins were nervous after a week of roller coaster rides.
The yen collapsed after the Bank of Japan remained in its ultra-accommodative political position.
The yen fell 2.2 percent on Friday afternoon, boosting the U.S. dollar, which rose 0.73 percent against a basket of major currencies.
Pound sterling fell 1 percent in New York as investors focused on the gap between U.S. and UK rates.
The Bank of England opts for a more moderate approach than the Fed.
“If a central bank does not move aggressively, yields and the price of risk will increase further along the way,” said NatWest Markets strategist John Briggs.
“Markets may continually adjust to higher global policy rate prospects … as the momentum of global central bank policy is one-way.”
ABC / Reuters
Posted 46 minutes ago 46 minutes ago, Monday, June 20, 2022 at 12:44 AM, updated 31 minutes ago, 31 minutes ago, Monday, June 20, 2022 at 12:59 AM