The ASX is set to open lower this morning, with ASX Futures pointing to a 1.53% slump for the ASX 200.
It follows the reversal of fortune by Wall Street’s major benchmarks on Friday, which copped a hiding after consumer inflation expectations unexpectedly increased in October.
The University of Michigan's preliminary October reading of consumer sentiment showed one-year inflation expectations rose to 5.1% from 4.7%.
All 11 US sectors declined led by growth-heavy sectors and resources, while Healthcare, Utilities, Financials and Staples outperformed benchmarks. Materials, Energy and Discretionary fell more than 3%.
All in all, 75% of US stocks fell as 70% of US stocks traded below their 200-day moving average (68% last Friday, 70% a week ago).
The Dow Jones index fell by 404 points or 1.3%. The S&P 500 index lost 2.4%. The Nasdaq index fell by 328 points or 3.1%. Over the week the Dow rose 1.2%; S&P 500 fell 1.5%; and Nasdaq fell 3.1%
For a full snapshot of what happened on Friday (and for all US coverage), check out our sister site proactiveinvestors.com and the article: US stocks reverse course to end the week after Thursday boom
Here’s what we saw (source Commsec):
- The Euro fell from near US$0.9800 to lows near US$0.9710 and was near US$0.9720 at the US close.
- The Aussie dollar fell from highs near US63.45 cents to lows near US61.90 cents and was near the lows at the US close.
- The Japanese yen eased from 147.35 yen per US dollar to JPY148.85 and was near JPY148.75 at the US close.
- Global oil prices fell by 3-4% on Friday after rising around 2% a day earlier. Fears of global recession and weak oil demand weighed on prices. The Brent crude oil price fell by US$2.94 or 3.1% to US$91.63 a barrel.
- The US Nymex crude oil price lost US$3.50 or 3.9% to US$85.61 a barrel. Over the week Brent fell by US$6.29 or 6.4%. And Nymex fell by US$7.03 or 7.6%.
- Base metal prices fell by as much as 2.9% on Friday, led by nickel. Zinc rose 1%.
- Over the week nickel, zinc and lead fell by as much as 3.2%. Other metals rose by as much as 2.6%, led by tin.
- The gold futures price fell by US$28.10 an ounce or 1.7% to US$1,648.90 an ounce. Spot gold was trading near US$1,642 an ounce at the US close. Over the week gold fell by US$60.40 an ounce or 3.5%.
- Iron ore futures rose by US53 cents or 0.6% to US$95.930 a tonne. Over the week iron ore rose by US31 cents or 0.3%.
The UK is once again in the news for all the wrong political reasons.
Markets are now focused on the impact of the decision by UK PM Liz Truss to sack chancellor Kwasi Kwarteng and bring in Jeremy Hunt.
The other burning question is whether Truss herself will serve in the PM’s position.
Truss has been in the position for five weeks and is already under pressure from ministers who are calling for her resignation and planning for life after.
The UK will also release its inflation update later this week.
A third term for Xi Jinping
In China, president Xi Jinping is flexing his muscle.
The leader is about to begin a historic third term after delivering a defiant speech to his party.
This is not usually the norm, and a third five-year term will give Xi Jinping more personal power over China than any leader since Mao Zedong.
“The question is: How elevated will Xi Jinping be?” the director of the East Asia program and an expert on Chinese defense and foreign policy at the Quincy Institute for Responsible Statecraft Michael Swaine said.
“There’s going to be a lot of continuity with a probable strengthening of his position.”
Xi Jinping wants to take on the US as the world’s most dominant superpower. What does this mean for the markets? We’ll have to wait and see.
Cost of living pressures to worsen after flood
Federal Treasurer Jim Chalmers has warned that Australia’s economic situation will worsen as new floods across Victoria and NSW take their toll.
"This is a human tragedy first and foremost but it has obvious consequences as well for the economy and for the budget," Dr Chalmers said in a press conference on Monday.
"We need to brace ourselves for the impact of these natural disasters on the cost of living."
Crops have been destroyed, farmland and livestock are inaccessible and a lack of local supply will drive costs up once again.
This is on top of existing factors such as the war in Ukraine and a deteriorating global economy.
"Australians are already under the pump and this will have obvious consequences for the budget," Dr Chalmers said.
"We will be there for Australians in the usual way and I had a good conversation with Murray Watt this morning and no doubt there will be more conversations with states and territories around the scale, the magnitude and the destruction which has been brought by these natural disasters."