ASX to slide as U.S. stocks fall broadly on Wall Street

January 19, 2022 - 4 months ago
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The Australian share market is poised for a weaker opening after a broad sell-off on Wall Street on Tuesday as interest rates on U.S. government bonds surged amid renewed jitters that the U.S. Federal Reserve will act more aggressively than expected to tackle rising inflation.

The ASX futures fell -59 points or -0.8% to 7,256, while our local currency, the Australian Dollar, is currently buying US$0.7186 (as of writing).

The long weekend failed to improve the mood of U.S. traders, as the latest wave of selling comes as Wall Street tries to predict how much the U.S. Fed will raise interest rates, and how fast.

Investors are now pricing in a better than 86% probability that the U.S. Fed will raise short-term rates at its meeting of policymakers in March.

The U.S. market was closed on Monday in observance of Martin Luther King Jr. Day.

Major U.S. stock indexes closed sharply lower Tuesday, as the finishing bell on the New York Stock Exchange (NYSE) viewed the blue-chip Dow Jones Industrial Average dropped -543.34 points, or -1.5%, to 35,368.47, its biggest one-day decline since November.

The broad-based Standard & Poor’s 500 Index slid -85.74 points, or -1.8%, to 4,577.11, while the rich-tech Nasdaq Composite Index lost -386.86 points, or -2.6%, to 14,506.90.

The dollar index was gained +0.62% to 95.70, while the yield on the benchmark 10-year Treasury note ticked up to 1.866%—its highest level in two years—from 1.771% Friday. Yields rise when bond prices fall.

Precious metals were mixed, with gold falling -0.5% to $1,812 per ounce, while silver gained +2.40% to $23.40.

Crude prices rallied, with Brent crude trading at $87.86 per barrel, up +2.2%, and U.S. benchmark West Texas Intermediate crude gained +2.8% to $86.10.

Iron ore prices rose +2.7% at US$127.30 a tonne, while cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, fell -1.9% and is currently trading at US$42,275.0 (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 7,320 (minor), with 7,270 lower.

The resistance is assessed from 7,365 (minor), with 7,395 located firmer above. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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