Australian stocks rally, Wall Street collapses on rising interest rates and “inflation fears”
Australian stocks have recovered from their initial losses, although investors still bet cautiously that central banks may be forced to raise interest rates earlier than expected to contain a surge in inflation.
The ASX 200 index was up 0.1% to 7,377 points as of 2:05 p.m. AEDT.
The Australian dollar fell to a six-week low at 72.66 cents US, after another 0.5 percent decline overnight.
Spot gold rose 0.8% to US $ 1,864.66 an ounce as inflation concerns pushed investors toward the safe haven metal.
Oil prices fell to their lowest level in six weeks after OPEC and the International Energy Agency warned of impending oversupply, as well as the prospect of China, Japan and the United States is drawing on their fuel reserves.
Brent crude futures fell 0.5% to US $ 79.90 a barrel Thursday afternoon – on top of its 2.6% collapse overnight.
The volatile cryptocurrency bitcoin climbed back above US $ 60,250.
Banks and oil brake ASX lower
Some of the worst performing stocks were Polynovo (-2.3 pc), Mineral Resources (-3.9 pc), Aristocrat Leisure (-3.6 pc) and James Hardie (-2.5 pc).
The âbig fourâ banks weigh heavily on the market, with shares of Commonwealth Bank, Westpac, NAB and ANZ falling between 0.7% and 1.3%.
This was after the CBA warned investors on Wednesday that its margins were stretched by intense competition and haircuts in the mortgage market.
A sharp drop in oil prices weighed on the stock prices of energy stocks Santos (-1.8 pc) and Woodside Petroleum (-1.4 pc).
Rising gold prices inflated the stock prices of Evolution Mining (+ 9.5pc) and Ramelius Resources and other gold miners.
Rising inflation in the UK and Canada
Canada and the United Kingdom were the last countries to report a sharp increase in their cost of living.
Inflation in Canada hit an 18-year high, as consumer prices jumped 4.7 percent in October, compared to a year ago.
âInflation has not been so hot in Canada since J. Lo [Jennifer Lopez] was at the top of the rankings in 2003, âwrote CIBC economist Royce Mendes in a research note.
A surge in gasoline prices in Canada (+ 41.7pc) was a major factor behind the surge in inflation.
Financial markets are betting that the Bank of Canada could raise interest rates as early as April of next year.
Meanwhile, UK consumer prices rose 4.2% in October compared to a year ago.
It was the biggest rise in UK consumer prices in a decade – and double the Bank of England’s 2% inflation target.
“The figure has been boosted by an increase in regulated price caps for energy and higher costs for oil,” wrote ANZ economists Brian Martin and Daniel Hynes in a note.
“The strength of the price hikes, combined with strong after-service labor market data earlier in the week, would appear to pave the way for the BoE to raise rates.
“Although, given the lack of a surprise rise earlier in November, markets may be reluctant to incorporate a December move with absolute certainty.”
Wall St plunges into “fear of inflation”
On Wall Street, the Dow Jones Industrial Average fell 0.5% to 35,948, the S&P 500 lost 0.2% to 4,690, and the Nasdaq Composite fell 0.3% to 15,923.
Despite the declines, the three major US indices are still trading at record levels.
The Dow Jones was weighed down by Visa shares, which fell 5.9% after Amazon said it would stop accepting operator-issued cards in the UK due to high fees charged for transactions.
While good US retail data this week showed that a rise in inflation has so far failed to stifle economic growth, investors feared further price increases could hurt growth. and push the US central bank to tighten policy sooner than expected.
Joe Saluzzi, co-director of trading at Themis Trading in New Jersey, said “the fear of inflation is still there” as the market continued to debate whether the rise in the cost of living was “transient “or” supply-driven “.
Target was the last major retailer to report positive results as it raised its annual forecast and exceeded earnings expectations, citing an early start to holiday shopping.
However, the company’s shares fell 4.7%, following the drop in those of rival Walmart on Tuesday local time, as both retailers reported a hit to their September quarter margins due to problems with Supply Chain.
ABC / Reuters