ASX 200 Dips as US Market Stumbles, Raising Concerns Over Global Economic Slowdown
The Australian stock market is poised for a downward shift this morning, following the unsettling trend set by Wall Street on Thursday. The upbeat US GDP data and robust Q2 corporate earnings have ironically sparked worry among investors about escalating inflation.
In parallel to the Federal Reserve's recent actions, the European Central Bank has also upped its interest rates by another 0.25%. This move was reflected in ASX 200 Futures and S&P/ASX 200 which were down by approximately 0.4% and 0.9% respectively.
Wall Street saw a slump in stocks on Thursday, with the Dow Jones Industrial Average breaking its winning streak of thirteen consecutive sessions - an achievement that was last seen back in 1987 and marks the second-longest ever recorded. On Thursday alone, the blue-chip index slipped down by nearly 237 points or roughly about 0.7%. Other major indices like S&P 500 and tech-focused NASDAQ Composite experienced drops of around 0.6% and 0.5% respectively after spending most of their day trading positively.
While there hasn't been much movement observed across major US indices over the week, investors are still juggling between appreciating continued economic growth against stronger-than-anticipated earnings from Wall Street companies.
On Wednesday, Jerome Powell – Chair of Federal Reserve – announced another quarter percentage point hike in rates while stating that further decisions would be based upon future economic performance indicators.
Turning towards commodity markets; Brent crude oil saw an uptick of approximately one point two percent bringing it up to $83.89 per barrel whereas Gold fell sharply losing 1.4%.
Meanwhile, Australian government bonds weakened, with yields on 2-Year and 10-Year yields declining slightly, while US Treasury notes contrastingly rose.
Economic Shifts Stir Up Mixed Results in International Stock Markets
Chinese stocks closed on a downtick, erasing earlier positive strides as investors braced for potential policy relaxations from Beijing. Semiconductor manufacturers bore the brunt of the losses, with Semiconductor Manufacturing Intl Co (SS:688981) sliding 1.5% after heightened scrutiny was imposed by the US Senate on Chinese tech investments. Property developers also experienced drops, including China Vanke Co Ltd Class A (SZ:000002) and Seazen Holdings Co Ltd (SS:601155) losing 0.9% and 1.2%, respectively.
On the flip side, carmakers saw an uptick following news that Volkswagen (ETR:VOWG_p) has infused $700 million into Chinese EV manufacturer XPeng - SAIC Motor Corp Ltd (SS:600104) grew 1.5% while HUAYU Automotive Systems Co Ltd (SS:600741) rose by 3.7%. Nevertheless, key indexes like Shanghai Composite Index finished little changed, while the Shenzhen Composite Index dropped half a percentage point and the ChiNext Price Index ended slightly lower at 0.3%.
Meanwhile in Hong Kong, stocks closed out stronger sustaining recent bullish trends driven by Beijing's new stimulus promises; Hang Seng index climbed up to settle at a promising figure of 19639 points—a rise of about 1.5%.
In Japan, the Nikkei 225 concluded higher amid strong performance from gaming and real estate companies due to sustained domestic earnings growth optimism, despite recent rate hikes announced by US Fed.