Australian stocks are expected to start the day lower following overnight losses on Wall Street.
ASX futures fell 58 points, or 0.8%, to 7,178 at 6:51 a.m. EAST.
At the same time, the Australian dollar remained flat at 71.76 US cents.
Global equities fell on Wednesday after stronger-than-expected economic data failed to calm investors’ concerns about high inflation and an impending recession, driven in part by rising oil prices.
A report by the Institute for Supply Management (ISM) showed that U.S. manufacturing activity rebounded in May, as demand for goods remained strong, even with rising prices.
The survey followed data released last Friday showing that spending by U.S. consumers, the largest contributor to U.S. economic output, rose in April, amid growing concerns about a recession.
Market sentiment, however, has remained subdued, due to the prevailing uncertainty caused by the pace of rising US Federal Reserve interest rates and the impact of the war between Russia and Ukraine on food prices and raw materials.
“There’s a lot of uncertainty,” said Michael Ashley Schulman, chief investment officer of Running Point Capital in Los Angeles.
“The market is climbing a wall of concern and there is a lot to worry about.”
“If we have a recession, it would be weird and unusual with almost full employment, companies still hiring and a huge demand for things.”
The MSCI Global Equity Index, which tracks stocks in 50 countries, fell 0.8%.
Meanwhile, the pan-European STOXX 600 index fell 1%.
On Wall Street, the three main indices ended lower, driven by stocks in the financial, healthcare, technology and consumer discretionary sectors.
The Dow Jones Industrial Average fell 0.5% to 32,813, the S&P 500 lost 0.8% to 4,101 and the Nasdaq Composite fell 0.7% to 11,994.
“Rising interest rates and inflation are only compressing valuations,” Schulman added.
“Maybe you like a business, and it can be good and you can still make a profit, but the valuation still has to go down because your core interest rate is rising.”
Oil prices continued to rise following the decision by European Union leaders to phase out Russian oil, although China ended its harsh confinement of COVID-19 in Shanghai, which could increase demand for crude oil in an already tight market.
Brent crude was up $ 115.83 a barrel at 6:52 a.m. EST.
ABC / Reuters