AThe day after the US Federal Reserve raises interest rates by 50 basis points for the first time in 20 years, Asian stock markets are expected to hit a plunge in US stocks for fear of a potential recession. When bond sales resumed, 10-year US Treasury yields exceeded 3%. The Bank of England raised official bank rates by 25 basis points, but in 2023 it showed a recession and stock market sales intensified.
Large fluctuations in the stock market show that investors are very uncertain about the current outlook for the global economy regarding concerns about rising interest rates and sustained inflation. In short, the recession caused by inflation. However, the market reaction evolved with panic selling, as the basic factors remained largely unchanged. From a technical point of view, the major indexes still hold significant support.
The day before Australia and New Zealand
SPI futures slide 1.54%, indicating a low open of ASX. Local markets can suffer from broader selling, which can lead to volatile sessions. The strong earnings of banks these days may help support emotions.
The Macquarie Group announced the results of FY22 and hit the ball from the park. It has a net income of $ 4.706 billion (up 56% year-on-year) and $ 1.732 billion (up 36% year-on-year). The world’s largest infrastructure asset manager commented that he would remain cautious and conservative in order to stay in the current environment. A 40% Frank dividend of $ 3.50 per share has been declared.
The NZX 50 fell 1.14% at the time of opening. The main factor weakening investment sentiment is the accelerating devaluation of the NZD, which puts upward pressure on import prices, causes domestic inflation and supports a more aggressive tightening move from the RBNZ.
US and EU stock markets overnight
The Dow Jones Industrial Average fell 3.12%, S & P fell 3.56%, and Nasdaq fell 4.99%.
The wider market ended in the red and growth stocks led the loss. Amazon, Meta Platforms and Netflix Inc. all plummeted by more than 7%. Apple was down 5.8%, and Microsoft and Alphabet Inc. were down more than 4%. Tesla Motors has decreased by more than 8%.
E-commerce stocks plunged with weak guidance in the second quarter due to post-pandemic softening demand. Shopify plunged 14.81%, eBay plunged 12%, and Etsy plunged 17.08%.
On the economic front, the US 30-year mortgage rate rose to 5.56%, the highest level in 13 years, challenging households to afford.
Major European indices have fallen into risk-off sentiment. Stoxx 50 was down 0.76%, CAC 40 was down 0.43%, DAX was down 0.49% and FTSE 100 was up 0.90%.
Crude oil prices on Thursday remained almost unchanged. OPEC and its allies have extended plans to increase oil production by 432,000 barrels, which has had a slight impact on oil prices. The slowdown in economic growth caused by China’s continued blockade and rising interest rates also weighed on demand sentiment. WTI crude oil futures rose 0.72% to $ 108.59 per barrel and Brent futures rose 0.97% to $ 111.21 per barrel.
Natural gas continued to grow by 4.98% to US $ 8.83 per MMBtu, up 20% over the past month.
Precious metals curtailed an early rise due to the appreciation of the US dollar, but closed at high prices. NYMEX gold futures rose 0.45% to $ 1,877.30 per ounce after reaching the daytime high of $ 1909.93. Silver rose only 0.09% to $ 22.50 per ounce.
The US dollar index resumed rising to 103.585, up 0.97% due to the sharp rise in US Treasury yields.
The pound sterling fell with a BOE rate hike of 25 basis points, expressing concern about a future recession. GBP / USD plunged 2% to 1.2369. All other currencies have risen against the US dollar. USD / JPY has risen above 130. Eurodollar fell 0.75% from the previous day to 1.0548, reaching the daytime low of 1.0490. This is extremely important support.
All commodity currencies have weakened against greenbacks. The AUD / USD fell 2% to 0.7113 and the NZD / USD fell 1.78% to 0.6426. The Canadian dollar also fell against the US dollar, despite soaring oil prices. USD / CAD rose 0.67% to 1.2837.
Ministry of Finance
Bond yields have skyrocketed. The 10-year US Treasury yield exceeded 3%, the 2-year Treasury yield rose to 2.70%, and the 30-year bond yield rose to 3.12%.
Australia’s 10-year bond yields were up to 3.38%, thanks to the Reserve Bank of Australia’s hawkish rate hikes.
The crypto market plummeted as risk-off sentiment intensified the sale of risk assets. Bitcoin has fallen 8.21% to $ 36,565.34 and Ethereum has fallen 6.67% to $ 2,749.44 in the last 24 hours. The total market capitalization of cryptocurrencies decreased by 7.04% to US $ 1.68 trillion.
Disclaimer: CMC Markets is a run-only service provider. The material (whether or not you have stated your opinion) is for general information purposes only and does not take into account your personal circumstances or purposes. This material does not contain (or should not be considered as such) any financial, investment, or other advice that you should trust. The opinions expressed in the material do not constitute a recommendation by CMC Markets or the author that a particular investment, security, transaction, or investment strategy is suitable for a particular person. The material has not been created in accordance with legal requirements designed to promote the independence of investment research. We do not specifically interfere with the transaction before providing this material, but we do not intend to use it before distribution.