The Aussie markets took a turn for the worse today, with both the ASX200 and the All Ords shedding more than 140 points. A drop of 1.7% for the 200, and 1.68% for the XAO followed a sharp drop in major indices on Wall Street, triggered by comments from Federal Reserve Chair Jerome Powell regarding potential rate hikes in the upcoming year.
All the major Wall Street indices including the S&P 500, Nasdaq, and Dow Jones each recorded more than a 2.5% fall, with the small cap Russell 2000 index shedding 4.39%. This effectively brings the indices back to the pre-election levels, with the post result bounce that followed being almost wiped out in 1 day. These decreases were influenced by Powell’s remarks, which hinted that rate hikes next year could not be ruled out despite the Federal Reserve’s decision to cut interest rates by 25 basis points. The Fed signalled only two rate reductions for 2025, with analysts previously expecting at least one more.
The impact on the US markets on local indexes is apparent, with this downward trend reflecting the market’s sensitivity to changes in U.S. monetary policy and its global impact. The ASX 200 has also returned to similar levels as pre U.S presidential elections, with a close in the 8,100 range a return to early November.
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