The ASX faces sharp losses today (Friday) with ASX futures down 85 points after a wild day on global markets. The Share Price Index had been down 110 points just before the close but a small rebound trimmed the day’s loss to around 1.2%.
Wall Street fell, the Aussie dollar topped 80 US cents briefly (reached a new three year high of 80.08 US cents), then slumped sharply, losing 1.20 US cents or more to trade around 78.80 US cents at 8am.
US bond yields soared, with the yield on the key 10-year US Treasury bond topping 1.60% before also sliding back to trade around 1.52% at 8am Sydney time.
Gold, oil and copper fell, iron ore edged higher.
The S&P 500 lost 2.45% or more than 96 points, ending at 3,829.34, the Dow shed 559.85 points or 1.75 to end at 31,402.01 and the Nasdaq was hammered, slumping 3.25% or 478.55 points to 13,119.43.
There was an absence of clearly defined factors – a senior Fed member repeated the central bank mantra that he saw strong growth ahead but no problems with inflation (which is what Fed chairman Jay Powell had said twice this week in his testimony to the US Senate and House of Reps).
His remarks assured investors increasingly (wrongly) worried that inflation is going to come back and eat them all, so all Street rose strong on Wednesday. Thursday it turned turtle and didn’t look back – the megatechs on the Nasdaq lost heavily on fears about inflation and strong growth (people on Wall Street and in the local market here have their heads on backwards about inflation at the moment – it is what the RBA wants to see, along with wage rises – the latter is not going to happen for a while though).
First-time US jobless claims fell to 730,000 for the week ended February 20, the Labor Department said. That was well below the 845,000 market estimate and a sharp decline from the 841,000 the previous week. Continuing claims hit a fresh pandemic-era low just above 4.42 million.
Perhaps that re-ignited those fears about inflation. But isn’t it good news that jobs are being created because it will mean more consumption and confidence? The US dollar fell, then stopped and rose as punters speculated the Fed might raise rates sooner – again ignoring the central bank’s mantra about rates remaining low for a long time.
Gold fell 1.3% on Comex with the April contract down $22.50 at $US1,77.40. Copper lost 1.6% to around $US4.23 a pound just after 8 am Sydney time, silver fell as well, down 1.8% to $27.40 and Nymex West Texas Intermediate shed value, then bounced in late trading to be up 0.38% just after 8am at $US63.45
The price of 62% Fe fines delivered to northern China rose $US1.53 a tonne to $US174.74 and the price of 65% Fe fines edged up 90 cents to $US197.80. Increasing interest in 62% fines was reported as Chinese steel mills prepare for the ending of the winter heating season on March.
That’s when restrictions on sintering and coking making in northern steel regions start easing. That usually sees a rise in demand for 62% ore which is cheaper than 65% fines and pellets (which are in higher demand in the winter).
