The Australian share market looks set to drop when play resumes today, with investors nervous about recessionary winds and weighing their options.
ASX futures were down 23 points or 0.31% to 7,313 early this morning, as Wall Street also looked shaky ahead of Federal Reserve officials’ appearance before Congress on Thursday.
On Wall Street we saw the Dow slip 0.7%, the S&P lose 0.5% and the Nasdaq edge down by 0.2%.
Bitcoin bucked the general downward trend, up 5.6% to $US28,205 this morning, a rise attributed to the world’s largest asset manager, BlackRock (NYSE:BLK), filing for a spot Bitcoin ETF with the US Securities and Exchange Commission last week – a move usually resisted by the SEC, but not when you’re as big as BlackRock.
We saw Energy lead 10 of the 11 S&P 500 industry sectors down, while Consumer Discretionary rose.
The Australian dollar fell during the day and overnight, slipping 1% at one point to below 68 US cents, while the greenback edged higher.
RBA minutes out
Observers attributed this to the RBA June minutes, released yesterday, which make some interesting observations.
These include that:
- inflation in many economies remained well above central banks’ targets, with core inflation remaining particularly ‘sticky’;
- wage growth is a partial source of inflationary pressure; but
- price gouging from some ‘firms’ might be a contributing factor to still-hot inflation – and forcing the central bank’s hand on rates.
This meant that the strength of that country’s recovery had become more uncertain than a month earlier, with retail sales and industrial production in decline and the property market in freefall.
In the US, all eyes will be on testimony by US Federal Reserve chair Jerome Powell before Congress tomorrow, during which he is expected to explain why the Fed settled on a rate pause for June.
Chinese data a concern
The other key global focus will be the aforementioned softening Chinese economic data.
The People's Bank of China cut its key lending rate yesterday but not by as much as some had expected – leading economists to wonder if the world’s second-biggest economy is doing enough to curtail its decline.
Indeed, European share markets responded to the news by closing lower with China-exposed mining stocks dropping by 2.2% and auto shares down 1.4%.
The continent-wide FTSEurofirst 300 index slid 0.6%, while the resource-dominated UK FTSE 100 index dipped by 0.3%, dragged down by energy (-1.1%) and precious metal miners (-1.4%).
In other news
Global oil prices slumped yesterday in volatile trade, again on the back of a forecasted soft demand for oil in China.
Researchers at China National Petroleum said China's crude demand will grow less than previously expected with strong interest in electric vehicles impacting consumption.
Brent crude fell by 19 US cents or 0.2% to US$75.90 a barrel, while US Nymex crude slid US$1.28 or 1.8% to US$70.50 a barrel.
Base metal prices fell on Tuesday – copper futures eased by 0.2%, ostensibly on the weak Chinese stimulus package, and aluminium futures price shed 1.6%.
Gold futures price fell by US$23.50 or 1.2% to US$1,947.70 an ounce, while spot gold was trading near US$1,936 an ounce at the US close.
Iron ore futures were up by 6 US cents or 0.1% to US$113.08 a tonne.