Good morning! David Chau here, with your latest financial updates.
The Australian stock market is expected to fall sharply this morning, with ASX futures down 1.4%.
It seems that markets are increasingly accepting the possibility that interest rates could rise further in the coming months (which is bad for “risky” assets like stocks).
However, the Reserve Bank is widely expected to keep its cash rate target unchanged this afternoon, which will also be the first policy meeting chaired by the new governor. Michele Bullock.
THE Australian dollar also suffered heavy losses — down 1.1% to 63.6 US cents (near its lowest levels since November last year).
This was after the US dollar hit its highest level in 11 months.
And that’s due to a sell-off in the bond market, which has pushed the U.S. government’s borrowing costs to their highest level since October 2007 (the time of the global financial crisis).
In particular, the 10-year US government yield climbed to 4.72%. (This is the return you’ll get for lending your money to Uncle Sam for a decade – similar to a term deposit).
Spot gold also fell 1.1% to US$1,827 an ounce, its lowest level in almost seven months. (Gold tends to do poorly when the US dollar rises).
On oil the steps, Brent crude futures plunged 1.8% to a three-week low of $90.56 a barrel, as traders took advantage of a recent rise and cashed out.
European stock exchanges also did poorly, with the Stoxx 600 index down 1%.
In the meantime, Wall Street comes out better than everything else, with the Dow Jones down 0.2%, while the S&P500 was flat, and the Nasdaq Composite increased by 0.7%.
This promises to be a very interesting day in the markets. Stay tuned!