The Australian stock market is scheduled for a slow start on Thursday as the end of the year approaches amid rising interest rates and the threat of a global recession.
Key points:
- The ASX has a slow start as the exercise ends
- The Dow Jones Industrial Average posted a gain, while the Nasdaq and S&P 500 closed lower.
- The price of iron ore futures fell 17 cents or 0.1% to $ 130.11 per tonne.
Future ASX SPI 200s just went green: 6,597 at 6:50 am AEST.
The Australian dollar fell 0.4% to 68.79 US cents.
On Wednesday, the ASX 200 benchmark index lost 0.9 percent to 6,700.
In New York, the Dow Jones Industrial Average gained 82.32 points, or 0.2%, to 31,029, while the rest of the benchmark closed slightly in the red.
The S&P 500 fell to 3,818, and the high-tech Nasdaq Composite also fell to 11,177.
According to Reuters, it has been the worst first half for the Wall Street benchmark since President Richard Nixon’s first term.
“The market is struggling to find direction,” said Megan Horneman, investment director at Verdence Capital Advisors.
“We had disappointing data, and the markets are waiting for the earnings season, when we will have more clarity about future earnings and an economic slowdown,” he said.
Market leaders Apple, Microsoft, and Amazon.com provided the muscle on the rise, while chips, small caps, and economically sensitive transportation performed lower than the broader market.
With the end of the month and the second quarter to one day, the S&P 500 has set the course for its biggest percentage drop in the first half since 1970.
The Nasdaq was on its way to its worst performance in the first half, while the Dow appeared to be heading for its biggest percentage drop from January to June since the financial crisis.
All three indexes were required to record their second consecutive quarterly decline. The last time it happened was in 2015.
“We have a central bank that has had to move from an easy monetary policy of decades to a hardening cycle,” Ms Horneman said.
“This is new to many investors.”
“We are seeing a price change so we expect it to be a very different interest rate environment in the future.”
Of the 11 major sectors of the S&P 500, five lost ground during the day, and energy stocks suffered the largest percentage drop. Healthcare led the winners.
Treasury yields have risen more than 1.6 percentage points to 2022, the largest jump in the first half since 1984.
This explains why interest rate-sensitive growth stocks have fallen more than 26 percent to date.
Investors are also contemplating rate hikes to curb inflation, while U.S. GDP data showed the economy contracted slightly more than expected at 1.6 percent.
It comes after consumer confidence data this week showed that consumer expectations had plummeted to their lowest level since March 2013.
Packaged food company General Mills rose 6.3% after its sales exceeded estimates.
Bed Bath & Beyond Inc fell 23.6% after the retailer’s announcement that it had replaced CEO Mark Tritton, hoping to reverse the fall.
Packet delivery company FedEx Corp fell 2.6 percent as a result of its disappointing margin forecast for its ground unit.
In Europe, the pan-European STOXX 600 index lost 0.7%, Germany’s DAX fell 1.7% and the UK FTSE 0.1%.
Gold in cash has just gone red, selling for $ 1,820.20.
In the oil markets, Brent crude rose 2.3% to $ 115.20 a barrel, while West Texas crude rose 2% to $ 109.53 a barrel.