Wall Street continued to be a mixed bag, with some late gains offsetting the general downward trend overnight.
The S&P 500 closed marginally lower (0.1%), the Dow Jones made up some ground during late trade to finish 0.3% down, while the Nasdaq managed creep over the line and was 0.06% higher as the markets closed.
Things were looking much worse earlier in the day, when the S&P 500 lost close to 20%, a red flag decline. The index looks set to record a decrease for its sixth straight week, which hasn’t happened since June 2011.
This morning ASX 200 futures were up marginally (0.1%), and the local market opened on a positive note, as investors looked to capitalise on the tech dip.
Crypto and tech losses
The losses on Wall Street were primarily felt in the tech sector, which is still reeling from higher-than-expected US inflation data.
Crypto still looks to be in trouble. Bitcoin rebounded on the previous day’s losses, but was still below its benchmark of US$30,000.
Back home, much-hyped cryptocurrency exchange-traded funds were overlooked by investors as some analysts warned the unregulated “ponzi scheme” was being undone by market realities.
Investors are also putting their cash back into the safe haven of the American currency, which is being driven up by monetary policy.
On that front, the Federal Reserve seems likely to raise rates at its next two meetings by 50 basis points each time.
Powell set for another four-year term
“But I would just say, we have a series of expectations about the economy,” Powell said in remarks published this morning. “If things come in better than we expect, then we’re prepared to do less. If they come in worse than when we expect, then we’re prepared to do more.”
In one of the few bipartisan moves by the US Senate, Powell has just been confirmed for a second four-year term as Fed chair, demonstrating that there is full backing in Congress for Powell to continue tightening the screws on inflation and curb rising prices. Powell had been leading the bank in a temporary capacity following the expiry of his first term.
Powell has quite a job ahead of him, with growing concern on the markets that the central bank's push to curb inflation will result in a recession – there has been a US$10 trillion fall in equity values in just 18 weeks.
Australian dollar still falling
The Australian dollar dropped as far as 68.29 US cents overnight, its lowest since mid-2020, due to a strong US dollar and worries about a slowdown in trade with China. Since early April, the dollar has dropped by 8 US cents.
Safe havens seem to be the order of the day as the markets reel – gold, which dipped slightly overnight, continues its 30-day trend of moving up, gaining slightly over the month (0.33%).
Meanwhile, there's speculation that Europe will soon increase rates, as fuel and food prices soar.