Despite yesterday’s repeat blow from the RBA in the form of the 12th consecutive rate rise, the ASX looks set to rise today.
ASX futures were up 25 points or 0.35% to 7,164 early this morning. The Aussie dollar was also buoyant in overnight trade, finishing up 0.8% to 66.71 US cents.
There was slight but positive movement in the US markets, with the Dow shifting 0.03%, the S&P up 0.2% and the Nasdaq lifting 0.4%.
What next for the US and the world?
Goldman Sachs (NYSE:GS) thinks there is cause for a brighter outlook in the world’s largest economy now that it has managed to chart a course through the murky waters of recent months. It has lowered the probability of the US entering a recession in the next 12 months to 25%, down from the March high of 35% after Silicon Valley Bank crashed.
The reasons the banking behemoth gave were a stabilised banking sector and last week’s debt ceiling deal on Capitol Hill.
Of the banking sector, Goldman chief economist Jan Hatzius said: “We have become more confident in our baseline estimate that the banking stress will subtract only a modest 0.4 percentage points from real GDP growth this year, as regional bank stock prices have stabilised, deposit outflows have slowed, lending volumes have held up, and lending surveys point to only limited tightening ahead.”
The World Bank isn’t so optimistic – in its latest Economic Prospects report it warns the global economy is headed towards a substantial growth slowdown as the impacts of repeated rate hikes by central banks around the world hit activity and start to be felt in lower-income countries.
“The possibility of more widespread bank turmoil and tighter monetary policy could result in even weaker global growth,” it said.
The report says the surprising resilience of the first half of 2023 is expected to give way to flatter economies as harsh monetary policy, the continued headwinds from the Russian invasion of Ukraine and the reverberations of a two-year pandemic work their dark spell.
Stronger recent momentum had caused the global bank to raise its world gross domestic product forecast for the year to 2.1% from 1.7% in January, but it has since cut its outlook for 2024 to 2.4% from 2.7%, saying that risks to the outlook remain tilted to the downside.
Crypto pain
The US Securities and Exchange Commission has sued the world's largest cryptocurrency exchange Binance and its chief executive Changpeng Zhao.
In a Tweet, the US SEC said it was charging Binance’s US-based affiliate, BAM Trading Services Inc., and founder Zhao with a variety of securities law violations.
It alleged that Binance had operated a ‘web of deception’ and filed 13 charges against Binance, Zhao and the operator of its US exchange.
In other news, the regulator has also sued the crypto exchange Coinbase, accusing it of illegally operating an unregistered exchange in the US.
It charged that Coinbase had made billions of dollars since 2019 by operating as a middleman on crypto transactions, while evading disclosure requirements meant to protect investors.
Back home, Commbank got a record $3.55 million rap on the wrists for breaching spam email laws.
The Australian Communications and Media Authority said the bank had sent more than 65 million unlawful marketing emails between November 2021 and November 2022, and most had unlawfully required recipients to log on to unsubscribe.
In other news
Spot gold lifted 0.1% to $US1,964.06 per ounce in trade overnight.
Brent crude is down 0.7% to US$76.20 a barrel, US Nymex dropped 41 US cents or 0.6% to US$71.74 a barrel and global oil prices generally eased around 0.5% yesterday as concerns about the world economy counterbalanced the Saudi and OPEC+ output cuts. as worries that sluggish global economic growth could reduce energy demand outweighed Saudi Arabia's pledge to deepen output cuts.
Base metals were mixed, with copper futures up by 0.1%, while aluminium futures fell by 1.6%.
Iron ore gained 1.4% to US$106.55 per tonne.