- The ASX 200 is expected to open 0.65% or about 45 points higher.
- The primary worry for the investors that accelerated the selling pressure seems to have taken a backseat, for now.
- The recent rally in oil prices paused on Thursday as investors turned their attention to the coronavirus crisis in India.
On Thursday, the Australian market had its third consecutive day of fall with miners and tech stocks leading losses, as pick up in inflation in the US stoked concerns over sooner-than-expected interest rate hikes. The index lost 0.88% or 62.2 points to 6982.7, closing below the 7,000 mark for the first time this month. However, today, there could be some relief for investors as the ASX 200 is expected to open 0.65% or about 45 points higher.
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The US equities rebounded from the lower levels on Thursday after falling for three consecutive days and benchmark Treasury yields softened, as investors snapped up tech stocks and shrugged off the worries about accelerating inflation, for now.
Read More: ASX Tumbles Amid Rise in US Inflation Rate
By closing, the Dow Jones was up by 1.4%, while the S&P 500 and the NASDAQ shot up by 1.3% and 0.9%, respectively. The US stocks had tumbled throughout this week till Wednesday after data showed US consumer prices unexpectedly surged the most in April 2021, since 2008.
The primary worry for the investors that accelerated the selling pressure was the concern over Federal Reserve’s move to tighten monetary policy sooner than expected, to reduce its supply of cheap money which had been propelling financial markets higher throughout the pandemic.
For now, however, inflation woes seem to have taken a backseat.
The benchmark 10-year Treasury yields, which spiked up by over 4% to 1.702% on Wednesday, edged down on Thursday to 1.6625% as investors took a breather.
The dollar index was steady at 90.727, holding gains eked out on Wednesday when expectations of the interest rate hike brought back the currency's demand. The Australian dollar also closed flat at 0.7727.
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Among cryptocurrencies, Bitcoin tumbled almost 13% on Wednesday when Tesla boss, Elon Musk said that the largest automaker would not be accepting Bitcoin as payment anymore because of its high energy use. The currency is still trading below US$50,000 mark, finding it difficult to recover.
On Thursday, following reports that the US Justice Department is investigating crypto exchange Binance, Bitcoin’s luster has fallen even further. Currently it is trading flat at US$49,726.
Dogecoin, after crashing over 21% on Wednesday, has recovered by almost 6.1% to US$0.414.
Gold traded higher
The pull-back in benchmark Treasury yields helped gold to recover from some of Wednesday's losses, when the surge in bond yields dampened the demand of non-yielding bullion. Spot gold climbed 0.7% higher, rebounding from a one-week low, to US$1,825.61 per ounce. The US gold futures settled 0.1% higher at US$1,824.
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Crude oil prices tumbled
The recent rally in oil prices paused on Thursday as investors turned their attention to the coronavirus crisis in India, and as a key US fuel pipeline resumed operations.
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Australian energy players such as Woodside Petroleum Limited (ASX:WPL), Beach Energy Limited (ASX:BPT), Origin Energy Limited (ASX:ORG) and Oil Search Limited (ASX:OSH) could see a gap down opening by a fair margin.