ASX is set for a soft open after Fed Powell’s appearance at the U.S. Senate

June 23, 2022 - 2 weeks ago
Share on twitter
Share on facebook
Share on linkedin
Share on email

The Australian share market appears set for a lukewarm start after U.S. stocks on Wall Street lost early gains tied to remarks by U.S. Federal Reserve Chair Jerome Powell that the U.S. central bank is “strongly committed” to bringing down inflation.

The Australian share market futures point to a +31 point rise, or +0.5%, to 6,420, while our local currency, the Australian dollar, is currently buying US$0.6918 (as of writing).

In the Wednesday session, U.S. stocks gave up afternoon gains and ended in the red on Wall Street after U.S. Federal Reserve Chair Jerome Powell gave testimony to Congress.

At the finishing bell on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average slipped -7.12 points, or -0.2%, to 30,483.13.

The broad-based Standard & Poor’s 500 Index slid –4.90 points, or -0.1%, to 3,759.89, while the rich-tech Nasdaq Composite Index tumbled -16.22 points, or -0.1%, to 11,053.08.

U.S. Federal Reserve Chair Jerome Powell acknowledged that the central bank’s battle against high inflation could tip a so-far resilient U.S. economy into a recession.

While testifying before the Senate Banking Committee, Powell said, “Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%.”

“We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”

U.S. Fed Powell will return Friday to testimony to Congress.

Meanwhile, the US dollar index (US DXY), which tracks the greenback against a basket of its peers, ended flat at 104.01 after a whipsaw session, while in the bond market, the 10-year US Treasury yield declined to 3.155% from 3.304% Tuesday. Yields climb when bond prices decline.

Precious metals were positive as spot gold rose +0.4% to $1,836.45 and silver added +0.1% to $21.38.

Global oil benchmark Brent crude was trading at $111.80 for a -2.8% decrease, while U.S. benchmark West Texas Intermediate (WTI) was at $103.60 — a 4.2% decrease.

Iron ore prices fell by -5.6% to US$109.40 a tonne, while cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, ended down by -2.9% and is trading at US$19,950.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a firmer opening is foreseen, with the intraday resistance seen at 6,565-75, with 6,615 seen above. Reassess from there.

Assessing the downside, the support is observed at 6,505 minor, with 6,470 located beneath. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

Share on twitter
Share on facebook
Share on linkedin
Share on email