ASX 200 to fall; Wall Street ends mixed on Powell’s comments

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ASX 200 to fall; Wall Street ends mixed on Powell’s comments

 ASX 200 to fall; Wall Street ends mixed on Powell’s comments
Image source: © Ptlee | Megapixl.com

Highlights

  • The Australian shares are likely to open lower on Thursday.

  • The latest ASX futures hint that the benchmark ASX 200 would open 3 points lower.

  • On Wall Street, the Dow Jones rose 0.27%, the S&P 500 slipped 0.071%, and the NASDAQ dipped 0.03%.

The Australian shares are likely to open lower on Thursday after a muted overnight trading session on Wall Street. The domestic market would also be negatively impacted by the recent comments from the US Federal Reserve Chairman Jerome Powell on rate hikes, while a decline in underlying prices may exert pressure on domestic commodity shares.

The latest ASX futures hint that the benchmark ASX 200 would open 3 points lower. On Wednesday, the ASX 200 declined 0.95% to 6,700.2 points.

Global indices fell and bond yields cooled down on Wednesday following comments by Powell who warned about the risk that Fed’s rate hikes could have on slowing the economy too much. But he maintained that the bigger risk was continuing consumer price rise.

On Wall Street, the Dow Jones rose 0.27%, the S&P 500 slipped 0.071%, and the NASDAQ dipped 0.03%.

In Europe, the Stoxx 50 rose 1%, the FTSE fell 0.1%, the DAX slipped 1.7%, and the CAC ended 0.9% lower. MSCI's gauge of stocks across the globe fell 0.52%.

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Bond yields

Following Powell’s rate hike comments, the US yields slipped for a second day in a row on Wednesday.

The yield on 10-year Treasury notes declined 10.5 basis points to 3.102%, while the two-year's yield slipped 6.5 basis points to 3.059%.

On the other hand, the US dollar rose 0.373%, while the euro fell 0.39% to US$1.0477.

Oil prices edge lower

Oil prices inched lower on Wednesday and fell nearly 2%. The prices declined on concerns that a recession could bring down oil demand. Additionally, there was a rise in the US gasoline and distillate inventories.

  • Brent futures for August delivery dipped 1.5% to close at AU$116.26 a barrel. The September contract fell AU$1.35 to AU$112.45.

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Gold prices fall

Gold prices dipped on Wednesday as traders were unsure about yellow metal’s direction amid both interest rate hike and recession concerns.

  • Spot gold fell 0.2% to AU$1,815.79 an ounce.

Meanwhile, iron ore prices also fell on Wednesday with Singapore iron ore future retreating following a 2-day rally. Similarly, the Dalian market traded on a weak note following comments from Chinese President Xi Jinping, calling for sticking to its "effective" COVID-19 management strategy.

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