Originally published by Rivkin Securities
After a mediocre start to the morning, US stocks began to decline at around midday Eastern US time and continued declining for the rest of the day. The Dow Jones closed just off the day low which also happens to be a new nine-month low and was a 2% decline for the day. UK and European stocks didn’t fare much better with the FTSE 100 and EuroStoxx 600 down 1% and 1.1% respectively. Virtually all risk assets sold off overnight including oil which fell below US$50 per barrel following a 4% decline for the day and commodities with the Bloomberg commodity index declining 1.2% overnight.
The gold price benefited from a weaker US dollar and is now sitting at US$1,246 per ounce, very close to a new five month high. The US dollar index (DXY) fell to 97.15 but is still very close to its 18-month highs.
All eyes are on the Federal Reserve interest rate decision which is due for early Thursday morning AEST. A 25-basis point rate hike is priced in but market participants are expecting (hoping) that Powell will dial back expectations for future rate hikes. Despite claiming to look only at economic data, the Federal Reserve has a history of responding to stock market weakness with more dovish monetary policy.
Data Releases:
- Australia Monetary Policy Meeting Minutes 10:30am AEST