Evening markets report Friday

Following a slump in US markets overnight after a hawkish speech delivered by Fed Chair Jerome Powell, the Aussie sharemarket had its worst day this week. The ASX 200 shed 125.5 points or 1.9 per cent, to 6574.7 – its worst level in around 3½ months. Our market is playing catch-up after Thursday’s public holiday, which is when the US Federal Reserve hiked its interest rate by a 75 basis points. All sectors and roughly 93 per cent of stocks in the ASX 200
finished in negative territory. Rate sensitive sectors such as Tech (down 4.4 per cent), Consumer Discretionary (down 4.4 per cent – worst day since March 2020) & Property (down 3.6 per cent) led in terms of declines. The risk-off sentiment was catalysed by a slew of rate hikes by a number of central banks globally.

Over the week, the Aussie sharemarket shed 2.4 per cent. All sectors posted weekly losses for the second consecutive week. Utility stocks declined for the seventh straight week, and fell by another 5.4 per cent – their worst weekly loss since the onset of Covid in March 2020. Financials fell for a sixth straight week. Coal miners were the best performers of the week, after sentiment was boosted by New Hope Corporation’s (NHC) financial results. Whitehaven Coal (WHC) hit fresh record highs.

Synchronised rate hikes sparked fears over the potential for a global recession as policymakers grapple with the highest inflation in several decades. The Bank of England pushed rates higher by 50 basis points, to 2.25 per cent. It said that it expects inflation to peak next month at 11 per cent – it currently is battling the highest level of inflation in any G7 economy. Norway’s central bank also raised its benchmark interest rate by 50 basis points to 2.25 per cent, and the Swiss central bank hiked rates by 75 basis points to 0.5 per cent.

In company news, PointsBet (PBH) has announced that it has ‘taken its first bet in the State of Louisiana’ after it ‘received launch authorisation from the Louisiana Gaming Control Board’. This marks PBH’s 12th online sportsbook operation in the US. PBH shares fell by 3.4 per cent amid a broader sell-off.

Next week will be rather quiet on the economic front as far as local investors and economists are concerned. The budget outcome for FY22 is however a key highlights. A $50 billion improvement on earlier estimates is expected to be announced on Wednesday. In the US, the personal consumption expenditures price deflator (PCE deflator) – a measure of inflation – will be released on Friday.

In the US tonight, S&P Global PMIs are scheduled. Fed Chair Jerome Powell will make opening remarks at a Fed Listens event and Vice Chair Lael Brainard and Gov. Michelle Bowman will moderate conversations from community and business leaders on how the pandemic has reshaped the US economy.

Today, 3.8bn shares were traded, worth $8bn. 369 stocks rose, 1,067 fell & 361 finished unchanged.

Originally published by Divik Nigam – (Author), CommSec