ASX rises despite Wall St falling on Friday, traders eye tomorrow’s RBA interest rate decision

Australian stocks opened higher ahead of the Reserve Bank’s interest rate decision on Tuesday.

Global equities generally ended last week lower as investor sentiment remained subdued amid fears of aggressive rate hike bets, coupled with fears of further disruptions to European gas supplies from Russia.

However, the ASX 200 rose 28 points, or 0.4%, to 6,857 as of 10:17 a.m. AEST, with energy stocks (+2.4%) leading the gains.

Whitehaven Coal jumped 4.6%, Coronado Global Resources firmed 4.4% and Beach Energy gained 4%.

Other resources stocks were generally higher, with BHP up 2% and Rio Tinto up 1.5%.

However, Fortescue weighed on the market after going ex-dividend today, it was down 5.6%.

Imugene was another big loser, down 4.1% on the open.

The Australian dollar was down at 67.93 US cents while Brent crude oil was up, trading at US$94.59 a barrel.

Wall St ends lower as Jobs reports gain fades

Data showed on Friday that U.S. employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7% suggest there may be less pressure on the Reserve. federal government to offer a third interest rate of 75 basis points. rate hike this month.

This initially encouraged investors and helped the S&P 500 index climb more than 1%. But the gains turned into losses during the day, plagued by fears that a 75 basis point rate hike was still in the cards.

The S&P 500 and Dow Jones Industrial Average lost 1.1% each, and the Nasdaq Composite fell 1.3%.

Softer data is seen as easing the need for the Fed to raise rates to aggressively rein in inflation, moves that market concerns say could lead to a recession.

Indeed, some analysts said the latest jobs data has kept the debate going over whether the Fed will raise interest rates by 50 basis points later this month, or 75 basis points. base.

“We continue to expect the Fed to rise 50 basis points in September and November. This report contains enough good news for the Fed,” analysts at Bank of America (BofA) said in a note to clients. .

But Treasury Secretary Janet Yellen’s hawkish remarks on Friday after the jobs data, where she reportedly said US inflation remained too high and it’s the Fed’s job to bring it down, dampened the euphoria. initial.

This situation was aggravated by the announcement of new disruptions in the supply of Russian gas to Europe.

“The G7 announced the imposition of an as-yet-unspecified December price cap on Russian oil exports, and Russia cut off Nord Stream 1 gas flows, and markets fell,” wrote Rabobank Global Strategist Michael Every.

“Stocks and bonds fell – but Brent oil rose before falling again.”

European stocks rebounded 2% from six-week lows on Thursday, while Britain’s FTSE jumped 1.9%, all ahead of this news on energy supplies.

The stock market rally helped the MSCI World Stock Index climb 0.5%. For the week, however, it suffered a 2.7% decline, which would mark its third consecutive week of losses.

New lockdowns in China had previously fueled worries about global growth, and high energy costs stemming from the war in Ukraine are weighing on Europe.

“The market is focused on the aggressiveness of the Fed with its hike cycle,” said Giles Coghlan, chief currency analyst at HYCM, adding that expectations for higher rates have solidified since a speech last week. by Fed Chairman Jerome Powell. at the Jackson Hole Central Banking Conference.

Markets are worried about “China’s slowdown, Eurozone recession and a hawkish Fed,” he said.

Equity funds saw the fourth-largest weekly outflow of 2022, while bond funds saw investors pull money out for a second straight week, BofA said in a note.


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