The Australian share market is expected to open slightly down, despite tech stocks on Wall Street sending the index to a record high.
Key points:
- The ASX is set to dip on open
- Wall Street is up with the Nasdaq at a record high
- The US Federal Reserve is seeking to soothe nerves on a looming rate hike
At 7:15am AEST, ASX 200 futures were down 0.1 per cent.
The benchmark closed 1.5 per cent higher yesterday after heavy losses earlier in the week.
The Nasdaq finished 0.8 per cent higher overnight, helped along to a record high by blue-chip names Microsoft and Facebook. The S&P 500 and Dow Jones also ended in the green.
But the focus on Wall Street was once again on the US Federal Reserve, with another round of comments from chair Jerome Powell.
Fears interest rates could begin rising as soon as next year in the US in response to rising inflation drove stocks lower at the end of last week.
In his address to the US House of Representatives, Mr Powell noted again that he expected the recent surge in inflation to be temporary.
“As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal,” he said.
US Treasury yields (interest) were broadly lower overnight, suggesting that investors were soothed by Mr Powell’s comments.
“Powell once again acknowledged the risk that reopening frictions on inflation ‘have been larger’ and ‘may turn out to be more persistent’ than expected,” CBA analysts noted.
“However, Powell said he had ‘a level of confidence’ that the lift in inflation will prove transitory and that 5 per cent year-on-year inflation would be unacceptable.”
The bank believes because underlying inflation has been more modest, that the Fed will largely stick to its guns.
“Indeed, trimmed inflation suggests underlying inflation in all economies we cover, with the exception of Canada, remains subdued,” CBA said.
The US dollar dropped, which in turn pushed the Australian currency slightly higher to 75.60 US cents.
Iron ore is also up 3 per cent to $212.70.
That was after it took a hit yesterday, on news that China was going to start investigating Australia’s most lucrative export.
Bitcoin dips beneath $US30,000
The controversial cryptocurrency briefly slunk beneath $US30,000 overnight for the first time since early this year.
At one point, it even dipped to $US28,600, a five-month low.
Bitcoin dropped as China continued to make moves to crack down on the unregulated currency.
The latest rumblings from the superpower is that China’s south-west Sichuan province has ordered cryptocurrency mining projects to close down.
Other cryptocurrencies were dragged down with Bitcoin, including the also popular Ether.
It is now back above $US32,000.