The Australian stock market is expected to fall on Wednesday, following a sell-off on Wall Street amid a drop in consumer confidence and growing fears of recession.
Key points:
- The ASX will fall, eliminating previous gains this week
- The Nasdaq was Wall Street’s biggest loser, down 3%.
- The price of oil is going up again, while gold is going down
The futures of the ASX SPI 200 fell 1.2 percent to 6,591, at 6:30 a.m. EAST.
The Australian dollar fell 0.2% to 69.08 US cents
On Tuesday, the ASX 200 benchmark rose 0.9 to 6,763.
Wall Street is estimated to be the biggest drop of the first half since 1970
The Dow Jones Industrial Average fell 491.27 points, or 1.5%, to 30,946.99. The S&P 500 lost 2% to 3,821, and the Nasdaq Composite fell 3% to 11,181.
Apple, Microsoft and Amazon were the heaviest drags on the highly technological Nasdaq.
The benchmark S&P 500 is on track for its biggest percentage drop in the first half of the year since 1970.
All three indices are on track to achieve two consecutive quarterly declines for the first time since 2015.
“At some point, that aggressive sell-off will dissipate, but it doesn’t look like it will be any time soon,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder.
Investors were reacting to new U.S. consumer confidence data, which showed the index fell 4.5 points in one month to 98.7, the lowest since February 2021.
Consumer assessment of current business and labor market conditions varied little, but their short-term outlook on income, business and labor market conditions was the weakest since March 2013.
The Conference Board said the index suggested weaker growth in the second half of 2022, as well as a growing risk of recession by the end of the year.
“Consumers hate inflation and this is depressing consumer confidence through the channel of expectations, even as households view labor market conditions as strong,” said Conrad DeQuadros, senior economic adviser at Brean Capital.
Retail stocks fell with the data. Shares of Nike fell 7% after the sportswear company posted weaker-than-expected guidance.
Cash gold fell 0.2% and sold for $ 1,81.50.
In the oil markets, Brent crude was worth $ 111.74 per barrel, while West Texas crude rose 1.9% to $ 111.16 per barrel.
In Europe, the pan-European STOXX 600 index gained (+ 0.2%), along with the German DAX (+ 0.3%) and the British FTSE (+ 0.9%)