ASX set for big fall as U.S. stocks see the worst day this year

May 6, 2022 - 3 weeks ago
Share on twitter
Share on facebook
Share on linkedin
Share on email

Australian shares look set to follow global shares sharply lower as all three main Wall Street benchmarks erased gains made during a relief rally on Wednesday.

The ASX futures lost -114 points or -1.6% to 7,212, while our local currency, the Australian Dollar, is currently buying US$0.7124 (as of writing).

The losses wiped out the gains the markets had enjoyed on Wednesday after the U.S. Federal Reserve announced it raised its benchmark rate by half a percentage point to 0.75% to 1%.

On Thursday, U.S. stock markets suffered their worst day of the year as investors worried about the U.S. Federal Reserve’s plans to raise interest rates to tackle soaring inflation.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average plunged -1,063.09 points, or -3.1%, to 32,997.97, erasing Wednesday’s gains.

The broad-based Standard & Poor’s 500 Index lost -153.30 points, or -3.6%, to 4146.87, while the rich-tech Nasdaq Composite Index fell -647.16 points, or -5%, to 12,317.69, the largest one-day percentage decline since June 2020.

The US Dollar Index (US DXY), which tracks the greenback against a basket of its peers, rebounded +1.01% from 102.50 to 103.56, while the yield on the benchmark 10-year Treasury note rose to 3.066%, the highest level since November 2018. Yields rise as bond prices fall.

Precious metals erased their gains, with spot gold falling by -0.4% to $1,874 and silver dropping -3.4% to $22.44.

Global oil benchmark Brent crude was trading at $110.86, up +0.6%, while U.S. benchmark West Texas Intermediate (WTI) was at $108.14 – a +0.2% gain.

Meanwhile, cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, plummeted by -9% and is trading at US$36,350.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a weaker opening is foreseen, with the intraday support located at 7,180, with 7,145 viewed beneath. Reassess from there.

Assessing the topside, the resistance is assessed at 7,255 minor, with 7,290 located above. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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