The ASX is expected to rise this morning, following a choppy day of trade on Wall Street.
ASX futures were up 0.4% to 7,102 points at 7:00am this morning and the dollar also rose to 69.7 US cents.
But the global markets are signalling that recovery is a long way off. Overall trends for 2022 haven’t been pointing in the right direction, with stocks in the US falling all year.
The Nasdaq has fallen nearly 25% in 2022 and is in a bear market, while the S&P 500 is on a six-week losing streak.
Chinese data weak, lockdown end in sight
Chinese economic data is out and it has spooked some markets. European luxury goods were down as a result of the news.
The country’s jobless rate was 6.1% last month, which is the highest since the early days of the pandemic in February 2020.
Despite this, the end of the lockdown is in sight and, with it, a recovery. Indeed, fuel prices were up following news that Shanghai will re-open on June 1.
The Brent crude price rose by 2.4% to US$114.24 a barrel, while the US Nymex crude price was up 3.4% to US$114.20 a barrel.
Measuring fear and greed
According to the CNN Business Fear and Greed Index, which measures market sentiment, the market has been in a state of ‘extreme fear’ for the last week, down from just ‘fear’ over the last year.
The scale gauges the mood of the market, working on the theory that there is market volatility at either end of the fear-greed continuum and that greed indicates inflated prices, while fear signals a drop.
Given that the Fed hasn’t yet finished taking a scythe to monetary policy, and that uncertainty is the word of the moment, there may well be further for the markets to fall.
Golden arches leave Russia
When McDonald's came to the former Soviet Union in the 1990s, it was an iconic moment. It was the first foray of American fast food into the rapidly changing region at a time when Francis Fukuyama tipped that the fall of the Iron Curtain promised ‘the end of history’.
Three decades later, the brand has pulled out of Russia as the war in Ukraine hits the three-month mark.
This is the first time the company has ever exited a major market. It will sell its 850 restaurants in the country to a suitable buyer and is making plans to remove its branding from the outlets, while keeping its trademarks in the country to stop impersonators.
Last month the company said it was losing $55 million per month, and $100 million worth of inventory, due to restaurant closures. It has also closed 108 restaurants in Ukraine while continuing to pay employees in that country.
The move follows Shell’s announcement that it will suspend activities in Russia, joining hundreds of other businesses which have taken similar action, including Nestle, Ford, Coca-Cola and Heineken.
Biotechnology investment focus
Back home, the ALP is set to unveil a plan to turbo-charge medical manufacturing and secure domestic supply chains for medical technology and vaccine production. The election promise includes working with the biotech sectors to boost procurement strategies, invest in local manufacturing capability and create jobs.
The proposed $1.5 billion Medical Manufacturing Fund forms part of the party’s $15 billion National Reconstruction Fund election platform.
The party cited a report that the medical technology sector could add $18 billion to the Australian economy and nearly 30,000 new jobs within a decade.
There is less than a week to go until the polls and the parties are arguing over costings and policies, which is better than the earlier campaign focus on personalities and gaffes.
In other news
Base metal prices were mostly up, by 0.8-2.0%, with zinc leading the charge, though nickel fell by 2.7%.
Gold futures added US$5.80 or 0.3% to US$1,814.00 an ounce, spot gold was trading near US$1,824 an ounce at close in the US, while iron ore futures price rose 1.2% to US$132.50 a tonne.