Australian shares are expected to start the day higher despite falling global equity markets, with European shares extending losses to a fourth straight session.
Key Points:
- The ASX 200 has lost more than 10 per cent since the year began
- Overnight, Wall Street’s three main indexes closed lower
- The pan-European STOXX 600 index fell for the fourth session in a row
ASX futures were up 24 points or 0.4% at 6,694 at 6.25am AEDT.
At the same time, the Australian dollar fell to 63.01 US cents.
The MSCI global index of shares was in the red in a volatile session on Monday, while the dollar gained slightly as investors braced for economic data and earnings season.
Any lingering hope that the Federal Reserve might shift to a more dovish stance toward monetary policy appeared to have died down on Friday as the September jobs report pointed to a persistently tight labor market.
Oil futures sold off and Wall Street stocks were volatile, while US bond markets were closed for a federal holiday.
A Russian missile attack in Ukraine that killed civilians and knocked out power and heat to cities across the country weighed on investors’ nerves, in apparent revenge attacks for what President Vladimir Putin described as a “terrorist” attack on Russia’s bridge to Crimea.
US investors, worried about rising interest rates and signs of economic weakness, were cautious ahead of inflation data due later in the week alongside the start of the season of third quarter results.
JPMorgan Chase & Co CEO Jamie Dimon told CNBC that the US and global economy could fall into recession by the middle of next year.
At the time, Fed Vice President Lael Brainard said tighter U.S. monetary policy has begun to be felt in an economy that may be slowing faster than expected, but that total increases of interest rates will not be seen for months yet.
“There’s nothing specific in Brainard’s comments that tells you the Fed is changing its policy, but at least there are some indications that the Fed is not proceeding blindly down a tight path of rate hikes,” he said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Connecticut. .
“Dimon’s comments definitely didn’t help. A lackluster bear market didn’t need those comments. Brainard has balanced them out a bit.”
According to preliminary data, the S&P 500 lost 26.80 points, or 0.74%, to end at 3,612.86, while the Nasdaq Composite lost 112.62 points, or 1.06%, to 10,539 ,78. The Dow Jones Industrial Average fell 90.46 points, or 0.31 percent, to 29,208.82.
The Nasdaq led decliners as the chip sector sold off sharply after the Biden administration released a broad set of export controls on Friday, including a move to cut off China from certain semiconductors made anywhere in the world with American teams.
Wall Street had already declined on Friday after the upbeat payrolls report bolstered expectations for another big rate hike.
Four of the biggest US banks are expected to kick off earnings reporting season on Friday, with the big lenders expected to report a decline in profits as the economy slows and volatile markets slow making agreements.
The MSCI All-World index was last down 2.3% and is poised for a fourth straight day of losses. The pan-European STOXX 600 was down 0.4%, after hitting one-week lows.
Chicago Fed President Charles Evans also said Monday that U.S. Fed officials are closely aligned on the need to raise the target policy rate to around 4.5 percent early next year. next year, unless data change current projections.
Minutes from the Fed’s latest policy meeting will be released this week and could offer some guidance on rate-setters’ thinking about the likely path of monetary policy.
The Bank of England sought to ease concerns about the expiry this week of its program designed to calm turmoil in the government bond market, announcing new safety measures, including doubling the maximum size of debt buybacks .
Oil prices extended losses after settling lower as investors weighed potentially tight supply against economic storm clouds that could portend a global recession and eroding fuel demand .
Brent crude was down at $95.94 a barrel at 06:53 AEDT.
Gold prices fell on a strong dollar and consolidating bets for an aggressive Fed rate hike pushed the unyielding bullion to its lowest level in a week.
Spot gold fell 1.6 percent to $1,667.89 an ounce.
ABC/Reuters