Aussie shares are poised to shed yesterday’s gains after Wall Street entered the trading week in the red.
Futures point to a 0.78 fall on the ASX 200 — a 57-point drop — ahead of the RBA’s final policy meeting until February.
What’s new on Wall Street?
New York was seeing red overnight as the US dollar and bond yields staged a comeback.
A strong selloff saw all four major indices and all 11 sectors close below the line, with the Russell 2000 leading the pack with a 2.78% drop.
Investors seesawed away from financials, energy and consumer discretionary stocks, triggering dips just below 3%.
Meanwhile, defensive companies escaped the least scathed — utilities, healthcare and consumer staple stocks all lost less than 1.5%.
Still, it looks like the hits were mostly felt on the top end of town: more than three-quarters of US stocks managed to stage a green finish.
Among the hardest hit was Elon Musk’s Tesla (NASDAQ:TSLA), which fell 7.1% after reports of a Model Y output cut at its Shanghai facility.
Apple (NASDAQ:AAPL) and Atlassian (NASDAQ:TEAM) also dipped into the red, down 1.9% and 4.7%, respectively.
Commodities and currency
Oil prices are skirting closer to a 10-month low — crude closed a volatile session in the red after the 34th OPEC Plus meeting and prolonged discussions around a Russian oil cap.
Oanda senior market analyst Ed Moya said risk appetite on Wall Street was fading away and that might prevent crude prices from pushing much higher right now.
“The crude demand outlook will remain volatile and concerns are growing that the economic downturn across Europe is about to get worse,” he explained.
“ Saudi Aramco (TADAWUL:2222) decreases its January oil prices for most of Europe. WTI crude could be trying to form a trading range around the $80 to $85 barrel levels.”
FITCH: “We still expect that there will be no Russian gas flowing into the #EU in 2023. .. However, warm weather, a reduction in European demand .. and continuing vast LNG supplies .. led to spot prices declining from their peaks ..” @FitchRatings https://t.co/YC2BEA5dxL— Carl Quintanilla (@carlquintanilla) December 5, 2022
Bullion is also trading softer — the precious metal dropped 1.69% to fetch US$1,779 overnight.
“Gold looks like it will consolidate below the $1,800 level, but a sustained move lower could require a fresh inflationary catalyst,” Moya noted.
The Aussie dollar kept pace with the red wave, losing 1.27% of its value against US paper. It’s currently buying 67 US cents and 55 British Pence.
On the ASX
Down under, markets will be tuned into the Reserve Bank meeting, with eyes trained on governor Philip Lowe for the next interest rate decision.
City Index senior market analyst Matt Simpson reckons the board will announce another hike.
“The RBA’s cash rate currently sits at 2.85%, after hiking rates for a record seven consecutive meetings totalling 275 basis points,” he explained.
“And despite being a late starter compared to the RBNZ, Fed and pretty much everyone – the RBA continue to believe the terminal rate will remain lower than their peers.
“I expect the RBA to hike rates for a record eight consecutive meeting tomorrow by 25bp. With that said, we shouldn’t discount the potential for a hold – which I’m sure consumers would love.”
In today’s top stories, Bellevue Gold is out to raise capital as it prepares to generate the first gold bar at its namesake gold project in WA.
There are no firm details just yet — Bellevue entered a trading halt this morning — but investors should know more by Thursday, December 8.