ASX to plunge as inflation fears trigger Wall Street rout

The Dow Jones Industrial Average lost 3.3% and the tech-heavy Nasaq fell 4.6%. The&The P 500, the benchmark for many index funds, fell 3.8%.

Treasury Secretary Janet L. Yellen said Americans shouldn’t expect immediate relief from high gasoline prices and warned of the possibility of slowing growth combining with the world inflation: inflation all over the world,” she told reporters.

Yellen pointed out that she did not expect the US economy to go into recession, arguing that it is well positioned for economic risks, pointing to rapid growth coming out of the covid recession. But she said Europe is probably more “vulnerable” citing its greater dependence on Russian energy than the United States.

“This is a risk-filled environment, both in terms of inflation and potential downturns,” Yellen said.

Tesla CEO Elon Musk has called ESG an “outrageous scam” after the electric vehicle maker lost its spot on an S&P Global index that tracks companies on their environmental, social and governance standards.

Britain’s worst inflation episode in 40 years is quickly becoming a crisis for both Prime Minister Boris Johnson’s government and the Bank of England.

The central bank is in the eye of the storm after consumer prices jumped 9% in the year to April. Cabinet ministers, economists and even a former BOE boss are complaining that Governor Andrew Bailey has been too slow to act and is failing in his job to keep inflation at 2%.

That finger-pointing may be intended to distract from the mounting pressure on Johnson’s administration to shield voters from the greater strain on living standards in memory.

A YouGov poll released on Tuesday found a record 72% of respondents think the government is mismanaging the economy, and three-quarters think it is doing poorly with inflation. More than half of those who voted Conservative in 2019 blamed the government.

Consumer price inflation in Canada has accelerated to a three-decade high. Annual inflation hit 6.8% last month, up from 6.7% in February, Statistics Canada reported Wednesday in Ottawa. That’s the highest since January 1991 and tops the median estimate of 6.7% in a Bloomberg survey of economists.

Today’s agenda

Local: Australia labor force data, April, including unemployment change, labor force participation rate and jobless rate; New Zealand IPP T1

Overseas data: US Philadelphia Fed Index, May; US existing home sales in April; US Leading Index April; Machine orders in Japan in March

Market Highlights

ASX futures down 121 points or -1.7% at 7052 around 5:50 a.m. AEST

  • AUD -1.0% to 69.59 US cents
  • Bitcoin $29,269.83
  • On Wall St: Dow -3.7% S&P500 -4.3% Nasdaq -4.7%
  • In New York: BHP -2.9% Rio -3.3% Atlassian -8.4%
  • Tesla -7.6% Apple -5.1% Amazon -6.6%
  • In Europe: Stoxx 50 -1.4% FTSE -1.1% CAC -1.3% DAX -1.2%
  • Spot gold +0.1% at US$1,816.50/oz at 2:06 p.m. PT
  • Brent -2.4% to $109.25 a barrel
  • US Oil -2.6% to $109.42 a barrel
  • Iron ore -3% to $124.20 per tonne
  • 2-year yield: United States 2.65% Australia 2.57%
  • 5-year yield: United States 2.88% Australia 3.10%
  • 10-year yield: United States 2.89% Australia 3.45% Germany 1.02%
  • US prices at 2:17 p.m. in New York

From today’s financial review

Reported two-tier wage increase to mitigate surging inflation: The Fair Work Commission has raised the prospect of a minimum wage system that would offer higher wage increases to the lowest paid while moderating the top rate increase.

(Chanticleer) The curtain falls on the era of cheap money: The tide of cheap money is receding, forcing suitors to halt potential takeover bids, while shareholders slam bankers’ lavish salaries, writes Karen Maley.

Forrest charging until Fortescue hits the green goal: Billionaire Andrew Forrest says Fortescue needs him to be ‘executive chairman’ until he achieves his dream of becoming a clean energy giant.

United States

The Nasdaq and the S&The P 500 fell 3% on Wednesday as a rally in growth stocks faded amid economic growth concerns, while Target dipped to the bottom of the S&P 500 after the retailer became the latest victim of the price spike.

Target’s first-quarter profit halved and the company warned of a higher margin hit by rising fuel and freight costs. Its shares fell 25.2% and trailed their worst day since the Black Monday crash of October 19, 1987.

The retailer’s results come a day after rival Walmart cut its profit forecast. The SPDR S&P Retail ETF fell 8.2%. All major 11 S’s&The P sectors declined, with consumer discretionary and technology stocks falling 5.7% and 3.5%, respectively.

Retailers suffered some of the biggest losses. Dollar Tree fell 16.8% and Dollar General 11.3%. Best Buy fell 9.3% and Amazon 5.5%. Tech stocks also fell sharply. Apple lost 4.2%.

The Cboe Volatility Index climbed almost 7% on Wednesday. The Fear Gauge is up 62% for the year according to MarketWatch.

The Dow is now down 12% for the year according to MarketWatch, while the S&P is down more than 16%. The Nasdaq is down 25%, well into a bear market.


The FTSE fell amid record UK inflation, while Premier Foods dominated mid-cap stocks after announcing plans to raise prices.

The FTSE 100 index closed down 1.1% after a three-day winning streak, while the mid-cap FTSE 250 index fell 0.6%.

European equities rose on attractive valuations, optimism over the easing of lockdowns in Shanghai and strong US economic data fueled risk appetite. The Stoxx Europe 600 rose 1.2% at the close in London.

In terms of earnings, Euronext rose 3.9% on record quarterly revenue. Dutch bank ABN Amro beat earnings estimates, but shares fell 11.9%. Germany’s Commerzbank AG rose 3.1%. Holiday group TUI fell 12.6% after announcing a share sale to repay parts of a German state bailout it received during the pandemic.


Chinese stocks closed lower after rebounding in the previous session as traders assessed Vice Premier Liu He’s new pledges of support for the struggling tech sector.

The Hang Seng Tech index pared earlier declines to end down 0.3% in Hong Kong. The benchmark Hang Seng index posted gains, while China’s CSI 300 index pared its losses to 0.4%. Automakers were among the biggest winners on both gauges following a report that Chinese government departments are in talks with companies about extending subsidies to electric vehicles.

The swings show markets have yet to set a direction after Tuesday’s highly anticipated meeting between Liu, China’s top economics official, and some of the country’s tech giants. Liu said the government will support the development of digital economy enterprises and their overseas listing. While that sparked a more than 5% rally in a gauge of Chinese stocks trading in the US, the excitement faded in the Asian session.


The British pound fell against the dollar on Wednesday, pulling away from near two-week highs after data showing Britain’s inflation hit a 40-year high raised concerns of a sharp economic slowdown given the pain inflicted on consumers.

As of 15:05 GMT, the pound was down 0.7% at US$1.24225, after falling 1% in morning trading. It had also overnight, before the data, briefly hit its highest level in nearly two weeks at around US$1.25.

Russia’s default risk rose as investors reacted to the possibility of the Biden administration completely blocking the country’s bond payments to U.S. investors starting next week.

The move could be the final straw in Russia’s debt saga, pushing the country into its first foreign default in a century. On Wednesday, Treasury Secretary Janet Yellen confirmed that Russia’s exemption is unlikely to be extended once it expires on May 25.

Billionaire Mike Novogratz has broken his silence on the TerraUSD collapse, calling it a “big idea that failed” and warning that the difficult environment for cryptocurrencies will continue.

The billionaire founder of Galaxy Digital Holdings and big supporter of Terraform Labs, the company behind Terra and Luna, had been silent for a week. “The reserves were not sufficient to prevent the collapse of the UST,” Novogratz wrote. “With hindsight, things always seem clearer.”


Chinese iron ore and steel futures tumbled after a two-day rally as traders were cautious about risks from COVID-19 restrictions that have clouded the outlook for economic growth in the biggest oil producer. steel in the world.

September’s most traded iron ore on China’s Dalian Commodity Exchange DCIocv1 ended the day’s trade down 5.3% at 791 yuan ($117.15) a ton, after hitting its highest level since May 6 on Tuesday at 849 yuan.

On the Singapore Stock Exchange SZZFM2the steel ingredient’s June contract was down 3% at US$124.20 a tonne at 0809 GMT.

Oil fell amid a broader market sell-off as fresh coronavirus outbreaks in China dampened crude demand prospects.

West Texas Intermediate futures fell near $110 a barrel after rising above $115. Beijing reported more new cases on Tuesday while the Binhai region of Tianjin put another area under lockdown. The surges underscore the challenges China faces in pursuing the Covid Zero policy, which has already cost the economy dearly.

A US inventory report indicated a tightening in the oil market. U.S. crude inventories fell 3.4 million barrels last week, according to a report from the Energy Information Administration on Wednesday. Meanwhile, gasoline inventories fell by 4.7 million barrels, adding to tensions in the commodity market.

“The market is extremely volatile, so any small news or stock selloff” can cause outsized swings in rough markets, said Dennis Kissler, senior vice president of trading, BOK Financial. “Fundamentals remain bullish.”

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