CBA shares closed down 1.88% today on a tough day for Aussie bank stocks and the markets generally. The ASX200 dropped 1.34% whilst the All Ords shed 1.38% as some of the spill over from the broader market pullback seen yesterday in international markets touched down at home.
In the U.S. financial markets this Tuesday, a grim shadow was cast as stocks plummeted in early trading and continued to decline into the afternoon. Market indicators painted a sombre picture, with the Dow Jones Industrial Average (DJIA) with the low of the day being 39,051.70 points, and it finally settling at 39,058.23, a 1% low. The tech-heavy Nasdaq Composite wasn’t spared as its low of the day dropped to 16,137.24 points, and finally resting at 16,240.45, a 0.95% drop at close. The broader S&P 500 index didn’t escape the route either, dropping down to 5,205.81, a 0.72% decline.
Wall Street’s sell-off epitomizes the deep-seated uncertainties looming over the path of future interest rate hikes. Investors scrutinized the latest batch of U.S. economic data, with a keen sense of vigilance, fuelling speculation and concerns around the Federal Reserve’s next move on rates.
Reflecting this sentiment, Treasury yields surged, with the yield on the benchmark ten-year note rising to a four-month high. Market participants are now reassessing the odds of monetary policy shifts, with the CME Group’s FedWatch Tool indicating a lower 56.3 percent probability of a Fed rate cut by a quarter point in June, a noticeable decline from 63.8 percent just a week earlier.
The market reaction also followed the Commerce Department’s report showing a significant bounce-back in factory orders, which surged 1.4 percent in February, an optimistic turn around following a steep 3.8 percent drop in January. Nonetheless, despite the positive spin on the manufacturing front, investors seem to focus on rate hike implications rather than growth signals.
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Sector-wise, a downturn was felt across the board, with housing stocks plummeting by 2.8 percent, networking stocks not far behind at a 2.7 percent loss, and semiconductor stocks retreating by 2.2 percent.
Globally, the Shanghai Composite Index (SSE) in China edged down slightly by 0.16 percent, while Japan’s Nikkei 225 Index (NI225) also down by 0.97 percent. Hong Kong’s Hang Seng Index (HSI), also recorded a low of 1.28 percent in the afternoon.
In Europe yesterday, the markets resonated with their American counterparts, all sinking amid the rising caution. Germany’s DAX Index fell by 1.13 percent, France’s CAC 40 Index diminished by 0.92 percent, and the U.K.’s FTSE 100 Index experienced a modest decline of 0.22 percent.
The bond market echoed the tensions felt across equities, with the yield on the ten-year note climbing by 3.4 basis points to 4.363 percent, this all hints at investor inclination towards safer assets in times of market uncertainty. A pullback after such a runup is completely normal, let’s see how long the quiet lasts.
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