ASX to fall as global markets renew rout

During a virtual forum, St. Louis Fed Chairman James Bullard said volatility in financial markets reflected the impact of recent events in the UK. “We are committed to bringing policy rates to the right level to put significant downward pressure on inflation here,” he told reporters.

The local currency slipped back below $65; the Bloomberg dollar spot index slipped 0.3 percent.

On bitstamp.net, bitcoin was down 1.1 percent at $19,408 as of 6:10 a.m. AEST.

The yield on the US 10-year bond rose 5 basis points to 3.79 percent as of 4:27 p.m. in New York. The UK 10-year bond rose 13 basis points to 4.13 percent after Prime Minister Liz Truss said government spending plans would continue.

“We needed urgent action to grow our economy, get the UK moving and also deal with inflation and of course that means making controversial and difficult decisions,” she told BBC radio.

“But I’m willing to do that as Prime Minister, because it’s important to me that we get our economy moving.”

On Wall Street, losses were widespread. The Dow lost 458 points to 29,225.6. This&P 500 was at 3640. The Nasdaq Composite closed below 11,000 points.

The NYSE Fang+ Index was 3.4 percent lower, dragged down notably by Apple. The VIX rose 5.4 percent to nearly 32.

Today’s agenda

Local: Private Sector Lending August; NZ August Building Permits and September ANZ Consumer Confidence

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Overseas data: China Manufacturing & Services PMI at 11:30 am AEST; Japan August industrial production; Eurozone September CPI at 19:00 AEST; UK last second quarter GDP; US personal income and spending in August, University of Michigan consumer sentiment in September

Note: The Golden Week holiday in China begins on October 1st

Market Highlights

ASX futures fell 24 points, or 0.37 percent, to 6523 near 6.25am AEST

  • AUD -0.5% to 64.92 US cents
  • Bitcoin -1.1% to $19,408 at 6:10am AEST
  • On Wall Street: Dow -1.5%S&P500 -2.1% Nasdaq -2.8%
  • In New York: BHP +0.6% Rio +2.4% Atlassian -2.7%
  • Tesla -6.8% Apple -4.9% Amazon -2.7% Alphabet -6.2%
  • Stoxx 50 -1.7% FTSE -1.8% CAC -1.5% DAX -1.7%
  • Spot Gold -0.1% to $1,657.68/oz at 2:34 PM New York time
  • Brent Crude Oil -1.2% to $88.24 a barrel
  • Iron Ore +0.4% to $95.85 per ton
  • 10-year yield: US 3.79% AUS 3.93% UK 4.13% GER 2.17%
  • US prices as of 4:27 p.m. New York

United States

The number of Americans filing new jobless claims fell to a five-month low last week as the job market remains resilient despite mounting headwinds from the Federal Reserve’s sharp rate hikes.

The Labor Department’s weekly jobless report on Thursday, the latest data on the health of the economy, also showed that jobless figures shrank to their lowest level in just over two months in mid-September. This increases the risk that the unemployment rate will fall this month and that the Fed will remain on its aggressive monetary tightening stance.

“The Fed is not yet slowing the pace of its rate hikes, which is virtually certain with 75 basis points higher in November and 50 basis points higher in December,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

Europe

The continent’s STOXX 600 index fell 1.7 percent after closing higher on Wednesday, as investors worried about the prospects of a global economic slowdown and a number of retailers in the region warned of the impact a cost of living crisis would have on their business .

Almost all STOXX sectors were down, with retailers down 4.4 percent, while the world’s second largest fashion chain, H&M, fell 5.9 percent after weaker-than-expected earnings, while Next fell 12.2 percent after cutting its sales and earnings forecasts.

The STOXX 600 index has fallen in 11 of the last 13 sessions, losing more than 10 percent of its value in that time.

Germany’s DAX index fell 1.7 percent as data showed inflation in Europe’s biggest economy rose more-than-expected in September to 10.9 percent yoy – the highest level in more than 25 years, driven by higher energy prices.

UK Gilt yields continued to rise after UK Secretary of State Liz Truss defended her controversial economic growth plan, including unfunded tax cuts that wreaked havoc on financial markets after they were introduced last week.

London’s FTSE 100 fell 1.8 percent, while the mid-cap index fell 3.1 percent.

Separate data on Thursday showed that economic sentiment in the euro zone fell sharply and more-than-expected in September, with businesses and consumers anticipating higher inflation and worsening financial conditions.

raw materials

Iron ore futures rose on Thursday, with the Dalian benchmark contract hitting a two-week high, underpinned by rising construction activity from top steelmaker China and continued political support for the sector.

Iron ore also remained supported by inventory replenishment ahead of China’s Golden Week holiday starting Oct. 1, analysts said.

Rebar prices held near a four-week high.

Rio Tinto said it has started manufacturing spodumene concentrate, a mineral mined for its lithium content, at a plant in Quebec as the mining giant doubles production of the battery metal for electric vehicles.

The London Metal Exchange is considering a consultation on whether to continue trading and storing Russian metals such as aluminium, nickel and copper on its system, the exchange said.

The LME issued a statement after three sources familiar with the matter told Reuters that the exchange plans to discuss a ban on new supplies of Russian metal so its warehouses cannot be used to offload hard-to-sell stocks.

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