Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - 06 April

Lewis Jackson  |  06 Apr 2022Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are set to follow Wall Street lower on fears of higher interest rates and a sooner than expected rate rise cycle. ASX futures were down 48 points or 0.6% at 7447 as of 7.00am on Wednesday, suggesting a negative start to the day.

Overnight, US stock indexes declined Tuesday as investors weighed the prospect of more assertive actions by the Federal Reserve to curb inflation.

The S&P 500 fell 57.52 points, or 1.3%, to 4525.12, a day after the indexes were pulled higher by rallying technology stocks. The tech-heavy Nasdaq Composite lost 328.39 points, or 2.3%, to 14204.17. The Dow Jones Industrial Average slipped 280.70 points, or 0.8%, to 34641.18.

Fed governor Lael Brainard said at a conference Tuesday that the central bank is strongly committed to taking steps that will cut inflation this year, including by announcing a significant reduction in its $9 trillion asset portfolio next month.

Locally, S&P/ASX 200 closed 0.2% higher at 7527.9 on Tuesday, despite the market falling midway through the session after the Reserve Bank of Australia's monetary policy decision.

Technology stocks drove some of the gain, closing 3.1% higher, tracking overnight strength in US tech stocks. Xero rose 4.5%, in one of the best performances of the day, while Iress rose 1.6% and Megaport finished 0.5% higher.

Energy stocks also finished strongly, closing 2.2% higher. Ampol was up 3.0%, while Woodside Petroleum gained 2.8%.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

At its April policy meeting, Australia's central bank left its official cash rate at 0.10% and signaled a growing willingness to raise interest rates soon.

In commodity markets, iron ore was flat at $US160.80 per tonne; gold futures fell 0.34% to $1,927.50.

The stock market's selloff accelerated, and government bond yields jumped, after Ms. Brainard's remarks. The US 10-Year Treasury Note yield rose to 2.55%. The yield on the Australian 10-year bond edged up to 2.85%.

The Australian dollar was buying 75.77 US cents as of 7.00am on Wednesday, up 0.01% from the previous close of 75.76. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 91.85.

Asia

Chinese share markets were closed for a public holiday.

Hong Kong share markets were closed for a public holiday.

The Nikkei Stock Average closed 0.2% higher on Tuesday, led by gains in tech stocks, despite falls in banks and insurers. Rakuten Group gained 5.6% and medical-information platform operator M3 climbed 3.6%. Meanwhile, Dai-ichi Life Holdings lost 4.4% and Mitsubishi UFJ Financial Group dropped 2.0% as the recent rising momentum in bond yields eased.

Europe

European stocks end trading mixed as investors remain cautious amid the ongoing conflict between Russia and Ukraine. The Stoxx Europe 600 rises 0.2%, the DAX drops 0.7%, the CAC 40 declines 1.3% and the FTSE 100 gains 0.7%.

"Markets in Europe have had a slightly softer tone after it was announced that the EU was proposing a mandatory phaseout of Russian coal imports in response to the atrocities committed by Russian forces in and around Kyiv, and in Bucha in particular," CMC Markets says.

The FTSE 100 outperforms other European indices as utility shares rally in anticipation of the UK government publishing its new energy security strategy to tackle soaring energy prices on Thursday, CMC says.

North America

US stock indexes declined Tuesday as investors weighed the prospect of more assertive actions by the Federal Reserve to curb inflation.

The S&P 500 fell 57.52 points, or 1.3%, to 4525.12, a day after the indexes were pulled higher by rallying technology stocks. The tech-heavy Nasdaq Composite lost 328.39 points, or 2.3%, to 14204.17. The Dow Jones Industrial Average slipped 280.70 points, or 0.8%, to 34641.18.

Fed governor Lael Brainard said at a conference Tuesday that the central bank is strongly committed to taking steps that will cut inflation this year, including by announcing a significant reduction in its $9 trillion asset portfolio next month.

Reducing the Fed's balance sheet, reversing its efforts to stimulate the economy through the purchase of Treasury securities and mortgage bonds, will help lift market interest rates -- and make stocks more expensive relative to less risky assets, said John Lynch, chief investment officer at Comerica Wealth Management.

The stock market's selloff accelerated, and government bond yields jumped, after Ms. Brainard's remarks.

Before Tuesday's selloff, the Nasdaq had climbed more than 15% since touching a 52-week low on March 14. The index is still off about 12% from November's record.

Investors also were assessing what a fresh round of sanctions against Russia might look like.

Reports of Russian atrocities inflicted on Ukrainian civilians in occupied areas have shocked Western governments, which have called for additional sanctions on Russia. Sanctions have already sent oil prices soaring above $100 a barrel and lifted prices for a swath of other commodities. That has heaped pressure on economies already facing multidecade high inflation.

In commodity markets, Brent crude, the international oil benchmark, lost 89 cents, or 0.8%, to $106.64 a barrel.

Twitter shares rose $1.01, or 2%, to $50.98 after the company said it would appoint Tesla Chief Executive Elon Musk to its board. The increase added to a 27% gain Monday that came after Mr. Musk disclosed he held a 9.2% stake in the social-media company.

Many other tech-related stocks fell, with information-technology among the weakest groups in the S&P 500. Applied Materials dropped $7.73, or 6%, to $121.71. Teradyne dropped $7.03, or 5.9%, to $111.91.

Investors are carefully watching the Fed -- which has embarked on a course of interest rate rises for the first time since 2018 -- to see if it can tighten monetary policy just enough to tamp down surging inflation but not so much that it damages the economy.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

AAP logo

© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend