ASX 200 to trade lower amidst fears of interest rate hike by Fed

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ASX 200 to trade lower amidst fears of interest rate hike by Fed

 ASX 200 to trade lower amidst fears of interest rate hike by Fed
Image source: lucadp,Shutterstock

Highlights

  • The Australian Stock Exchange is anticipated to open lower on Tuesday.
  • Overnight trade saw Dow Jones going down by 0.45%, the S&P 500 going down by 0.14%, and the NASDAQ trading 0.05% higher on Wall Street.
  • Chinese shares closed higher on Monday, supported by gains in consumer and healthcare firms.

The Australian share market is expected to open lower on Tuesday, likely due to losses in commodity-reliant indexes on weaker prices, domestic Omicron infections reaching over 1 million and denting investor sentiment amidst looming rate-hike apprehensions.

As per the latest SPI futures, the ASX 200 is anticipated to open the day 0.6% lower this morning. This follows a weak start to the day on Wall Street, which in overnight trade saw Dow Jones going down by 0.45%, the S&P 500 also going down by 0.14%, and the NASDAQ trading 0.05% higher.

World stocks tumbled on Monday while the 10-year Treasury yield hit a two-year high as there are speculations that the US Federal Reserve could increase interest rates as soon as March. This is one reason why investors were seen shying away from risky assets on Monday.

Monday’s decline follows a hurting initial one week of the year when there was a strong indication from the Federal Reserve that it would tighten the policy in order to tackle inflation and then data demonstrating a robust US labor market, discouraged investors, who had driven equities to record highs during the holiday period.

Technology stocks, which have escalated in the last two years, led the fall while traders preferred lower-valued energy & financial shares.

The pan-European STOXX 600 index sagged 1.48% and MSCI's global gauge of stocks shed 1.16%.

On Monday, European shares recorded their biggest single-day drop since late November as increasing bond yields relied on the technology sector, while the quick spread of the Omicron variant of COVID-19 hurt investor sentiment.

Bond yields

  • US 10-year Treasury yields were at 1.778%.
  • The 30-year bond yield stood at 2.113%.

The US 10-year Treasury yield was at its 2-year high on Monday.

Gold trades higher

Gold edged higher on Monday, as investors remained more focused on crucial inflation data due later this week, which could result in faster rate hikes by the Fed.

  • S. gold futures ended 0.1% higher at $1,798.80.

Oil prices decline

Oil prices declined on Monday largely because rising cases of the Omicron variant have hit economic activity across several countries. Besides, the restoration of oil production in Libya and Kazakhstan also resulted in lower oil prices.

  • WTI crude fell 0.9% to US$78.17 per barrel.
  • Brent settled 1% lower at US$80.83 per barrel.

Australian Stocks on investors’ radar today:

The stocks which will be on investors’ watchlist on Monday include- Energy producers like Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX:WPL), Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX:NST), NOVONIX Limited and AGL Energy Limited, and The Platinum Asset Management Ltd (ASX:PTM).

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