Wall Street reverses gears on surging interest rates


Related Story: Dow Jones plunges 1,175 points in its biggest one-day points fall

Despite some sharp gains in early trade, Wall Street ultimately finished its day in negative territory.

Market snapshot at 8:30am (AEDT):

  • ASX SPI 200 futures +0.5pc, ASX 200 (Wednesday's close) +0.8pc at 5,879
  • AUD: 78.24 US cents, 56.36 British pence, 63.79 Euro cents, 85.84 Japanese yen, $NZ1.08
  • US: Dow Jones -0.1pc at 24,893, S&P 500 -0.5pc at 2,682, Nasdaq -0.9pc at 7,052
  • Europe: FTSE +1.9pc at 7,279, DAX +1.6pc at 12,590, Euro Stoxx 50 +1.8pc at 3,454
  • Commodities: Brent crude -2.4pc at $US65.28/barrel, spot gold -0.7pc at $US1,315.22/ounce, iron ore +1.7pc at $US77.20/tonne

What happened on Wall Street?

The tech-driven Nasdaq was hit hardest, down 0.9 per cent.

The broader S&P 500 index pulled back to finish 0.5 per cent lower — though it rose as much as 1.2 per cent earlier in the session. This was its biggest one-day reversal in two years.

As for the blue-chip Dow Jones index, it also experienced a sharp pullback.

By the closing bell., the Dow had shed 0.1 per cent (19 points). It rose by as much as 381 points at its peak, but also fell by as much as 127 points at its lowest ebb.

Wall Street lost steam in afternoon trade, after US 10-year Treasury yields rebounded to 2.836 per cent (their highest levels in four years).

The spike in bond yields and the prospects of of rising inflation are what triggered the market sell-off in the US last Friday, which then spread worldwide.

Over the past week, stock markets around the world have lost about $US4 trillion from the global sell-off — which is about 44 times more than Bill Gates' total wealth.

However, those relatively small percentage movements overnight were closer to what markets expected, compared to the Dow's 4.6 per cent (1,175 point) drop earlier this week.

Traders were still bracing for further volatility in the near future, as they tried to determine if the wild swings these past few days were the beginning of a deeper market correction, or just a temporary blip in the US market's nine-year bull run.

European stock markets finished higher overnight, snapping a seven-day losing streak.

The London, Paris and Frankfurt indexes gained between 1.5 and 2 per cent.

Aussie dollar drops

Australian shares are tipped to open slightly higher today, but with a little volatility.

The Australian dollar fell by 1 per cent to 78.2 US cents.

It also dropped against the British pound (-0.5pc), euro (-0.2pc) and Japanese yen (-1pc).

As for local economic news, NAB will release its fourth-quarter business confidence report this morning.

More to come.

Original Article

Leave a Reply