The ASX looks set to open lower this morning with the ASX 200 futures trading down 45 points at 8:45am (AEDT).
US markets fell overnight as Federal Reserve chair Jerome Powell said central bank officials will proceed carefully with interest rate hikes and that policy isn’t too tight.
“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” he said.
The Dow Jones fell by 0.8%, the S&P 500 index was down 0.9% and the Nasdaq index lost 1%.
The 10-year US Treasury yield has reached a 16-year high of 5.001%. Powell said possible yield drivers include resilience of the economy, concerns about rising fiscal deficits; and the Fed's unwinding of its balance sheet, or “quantitative tightening”. He also noted the changing correlation between bonds and equities, where more supply shocks make fixed-income a less attractive hedge to equities.
Initial US jobless claims fell by 13,000 to 198,000 last week, better than the 210,000 expected. Existing home sales slid 2% in September, and the Philadelphia Fed manufacturing index lifted.
In Europe, share markets dropped for a third straight session on Thursday following a slew of downbeat corporate earnings, particularly from interest rate-sensitive stocks including real estate firms. The continent-wide FTSEurofirst 300 and UK FTSE 100 indexes each lost 1.2%.
Commodities
The gold price, in Australian dollar terms, reached a record $3,138 an ounce this morning. Many Australian gold miners, including Northern Star, Resolute and St Barbara, incur operating costs in Australian dollars but sell their gold in US dollars — boosting their profit margins as the US dollar rises.
In US dollars, gold is 1% higher to $US1986 an ounce this morning, having climbed this week as a safe-haven play. The Australian dollar is buying 63.3 US cents.
Global oil prices rose by about 1% overnight in another volatile session. Brent crude rose by US88 cents to US$92.38 a barrel, and the US Nymex crude price gained US$1.05 to $89.37 a barrel. Immediate concerns that the conflict in the Middle East will reduce supplies were not assuaged by a deal expected to bring more Venezuelan crude to the market in the months ahead.
Base metal prices also edged higher following firmer economic data from China. The copper futures price rose by 0.3% and the aluminium futures price added 0.4%.
Iron ore futures inched higher by just US3 cents to US$119.04 a tonne.
What’s on today?
Sales and production reports are scheduled for Alumina, Atlas Arteria, Growthpoint Properties, Lynas Rare Earths and Yancoal. Companies hosting AGMs include EVT, Cleanaway Waste Management (NYSE:WM), Macmahon and Worley, while trading is expected to resume in Liontown Resources (ASX:ASX:LTR) shares.
On the small cap front
The S&P ASX Small Ordinaries lost 0.64% yesterday.
You can read more about the following on Proactive throughout the day: