The ASX 200 and the Hang Seng Index both began the week in negative territory on Monday. As a respect for the Aged Day, Japanese marketplaces were closed. Investors reacted to the Friday dip in US equity markets, with tech companies being a drag. Rising oil prices frightened investors this week. A rapid and persistent rise in crude oil prices might undermine central banks’ attempts to control inflationary pressures. The US equities markets closed the day in the red on Friday. The S&P 500 and NASDAQ Composite Index fell 1.22% and 1.56%, respectively, while the Dow fell 0.83%.
Tensions escalated at the start of the week as investors braced for interest rate decisions from the Fed, the Bank of England, and the Bank of Japan. The markets expect the Fed to press the pause button. However, the economic forecasts put investors at danger of a major sell-off. Upward revisions to GDP and inflation, as well as negative adjustments to unemployment, might boost betting on a rate rise in November. A more optimistic forecast might potentially delay the first interest rate drop back to 2025. There is also the issue of the Bank of Japan and negative interest rates. Indications of a shift away from negative rates would fuel a Yen rally. A shift away from negative interest rates would put pressure on Japan’s export stockpiles.
The RBA meeting minutes will be of interest to investors this morning. Indications of more RBA rate rises would encourage speculation that central banks may have more interest rate hikes in the works. The RBA kept the official cash rate at 4.1% unchanged this month. The Rate Statement suggested that the RBA was nearing the conclusion of its monetary policy tightening cycle. Several factors, including China’s economic troubles, uncertainties about domestic family spending, and the property market, have prompted the RBA to pause.
In the Futures Markets, the ASX 200 was down 21 points, while the Nikkei was down 230 points. The NASDAQ Composite Index gained 0.01% on Monday, while the Dow and S&P 500 gained 0.02% and 0.07%, respectively.
On Monday, the ASX 200 fell by 0.67%. The S&P/ASX All Technology Index (XTX) fell by 1.98%, as did technology stocks. Oil stocks have also suffered. Mining stocks had a mixed day. BHP Group Ltd (BHP) and Rio Tinto (RIO) both earned 0.18% and 0.34%. NCM (Newcrest Mining) increased by 0.57%. However, Fortescue Metals Group (FMG) fell 0.09%, bucking the trend. The major four banks had a mixed start to the week as well. National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) both declined by 0.34% and 0.51%, respectively. ANZ Group (ANZ) and Westpac Banking Corp (WBC) both increased their holdings by 0.19% and 0.09%, respectively. Oil stockpiles, on the other hand, have plummeted. Losses for Woodside Energy Group (WDS) and Santos Ltd (STO) were 1.43% and 1.64%, respectively.
The Hang Seng Index fell 1.39% in tandem with the ASX 200. China Evergrande Group (3333.HK) commented in on the news that authorities had detained China Evergrande employees. Tencent Holdings Ltd (0700.HK) and Alibaba Group Holding Ltd (9988.HK) both lost 2.38% and 1.58%, respectively. Bank stocks have also suffered. China Construction Bank (0939.HK) and Industrial and Commercial Bank of China (1398.HK) both dropped by 1.13% and 1.32%, respectively. HSBC Holdings PLC (0005.HK) lost 0.16%.
On Monday, Japanese markets were closed in observance of Respect the Aged Day.
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