More volatility in markets today and the rest of the week thanks to the fallout of the Fed’s decision to leave its key interest rate unchanged.
That was after another volatile week, and especially a nervy day of trading on Friday and Friday night – meaning that when trading opens here today, the market will be looking at a crunch from a fall of around 70 points on the ASX 200, according to the futures market.
Friday’s big falls (Australia was the exception with a rise on the day of half a per cent or 24 points) started in Europe and ended in the US.
In Asia, most markets gained, but the sell-off came as European markets caught up to the weak close in New York the day before and sold off, with the German market whacked hard and the Dax index losing 3% on the day.
That saw US shares down 0.2% for the week, Eurozone shares down 0.6% and Japanese shares down 1.1%.
Chinese shares also fell 3.2% as official support for the market was again tested.
Australian shares managed a 2% gain though, a gain that will be cut today, but one that was probably a more accurate reflection of where the market should be after the Fed’s decision.
Bond yields followed a similar pattern to shares, initially rising before falling again as investors upped stakes and moved into safety for a while.
Some of the bond buying has come from aggressive fund managers punting the Fed won’t lift rates this year, and realising that at 2.1%, 10 year bonds offer a good return compared to the 2.2% dividend yield for the S&P 500.
Commodity prices reversed some or all of their gains later in the week as global growth concerns came back into focus and the $US rose.
And, while the $A rose over the week it ended well off its highs and under 72 US cents.
Saturday morning saw Wall Street end deep in the red.
The S&P 500 fell 1.6% to 1,958.08, for a weekly loss of 0.2%, the Dow lost 1.7% on the day and 0.3% over the week to 16,383. The Nasdaq Composite finished 0.1% higher at 4,827.23 over the week, but down nearly 1.4% on the day.
The gains in Asia on Friday were a more accurate reflection of the reality of the Fed’s decision – there’s been no real change in global economies and the only change was the Fed catching up to the changes markets have been dealing with in the past six weeks to two months.
Japan’s market swung to a loss for the week after the yen strengthened. The Nikkei fell 2% on Friday, taking its losses for the week to 1.1%.
In Hong Kong, the Hang Seng Index rose 0.3% to close at 21,920.83, and up 1.9% for the week. In Sydney, the ASX 200 closed up 0.5%, with both markets notching up their second week of gains.
The Shanghai Composite Index rose 0.4% to recover some losses for the week, with shares seeing some choppiness ahead of the close. The benchmark shed 3.2% last week.
