Gold price

ASX set to edge higher, Wall street mixed on tech fall

Sep 23, 2022

Australian shares are set to edge higher on Wednesday morning, after a mixed day on Wall Street on falling tech stocks and data.

Key points:

  • The ASX 200 is expected to open slightly up on Wednesday 
  • Wall Street was mixed, with the only main index to finish higher
  • Iron ore down $US1.19 or 0.9 per cent to $US133.10.

ASX SPI 200 futures was slightly up, at 7,126, by 6:35am AEST.

The Australian dollar was flat at 71.05 US cents

The SP 500 and the Nasdaq finished in the red on Tuesday as worries that aggressive moves to curb decades-high inflation might tip the US economy into recession dampened investors' appetite for risk.

The tech-heavy Nasdaq dropped 2.4 per cent to 11,264. The SP 500 fell 0.8 per cent lower to 3,941, and the Dow added 0.2 per cent to 31,928.

"As we step back and acknowledge the primary market catalysts, it’s really been about the Fed pivot and the change in interest rates, which have influenced prices across the capital markets," said Bill Northey, senior investment director at US Bank Wealth Management.

Much of the sell-off was driven by a profit warning from social media company Snap which sent the company's shares plummeting and sparking contagion throughout the social media segment.

Meta Platforms, Alphabet, Twitter and Pinterest all ended the session lower, as did the broader SP 500 Communications Services sector.

Global supply chain disruptions have been exacerbated by Russia's war with Ukraine and restrictive measures in China to control its latest COVID-19 outbreak, sending inflation to multi-decade highs.

The US Federal Reserve has vowed to aggressively tackle persistent price growth by hiking the cost of borrowing, and minutes from its most recent monetary policy meeting, expected on Wednesday, will be parsed by market participants for clues regarding the speed and extent of those actions.

Investors currently expect a series of 50-basis-point rate hikes over the next several months, fuelling fears that the central bank could push the economy into recession, a scenario that is increasingly being baked into analyst projections.

"Tomorrow we look to the FOMC minutes for any signs that the approach to monetary policy may lean further hawkish or dovish than was laid out at the last meeting," US Bank Wealth Management's Northey said.

Data released on Tuesday painted a picture of waning economic momentum, with new home sales plunging and business activity decelerating.

Fed Chair Jerome Powell's counterpart in Frankfurt, European Central Bank President Christine Lagarde, said she expects the ECB deposit rate to be raised at least 50 basis points by the end of September,

Apparel retailer Abercrombie Fitch Co tumbled after posting a surprise quarterly loss and cutting its annual sales and margins outlook. 

Work-from-home tool Zoom Video Communications jumped following its full-year profit forecast hike due to solid enterprise demand. 

Spot gold was up 1 per cent $US1,7865.80. On oil markets, Brent crude was near flat at $US113.38 per barrel, while West Texas crude was down 0.5 per cent to $US 109.75 per barrel.

In Europe, the pan-European STOXX 600 index dropped 1.1 per cent, along with Germany’s DAX lost 1.8 per cent, and Britain's FTSE was down 0.4 per cent.


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