Australian shares are expected to fall slightly this morning, as copper prices dropped to a 16-month low and commodity prices continued to slump over worries about a possible global economic slowdown.
ASX futures were down 0.1 per cent, to 6,416 points, by 7:25am AEST.
The Australian dollar was buying 68.95 US cents, after sliding 0.5 per cent overnight.
US Federal Reserve chairman Jerome Powell testified before Congress for a second day — a day after saying the Fed was committed to cutting inflation at all costs, and acknowledged a recession was “certainly a possibility”.
Investors have been weighing the risk of hefty interest rate rises tipping economies into recession.
“What we’re seeing here is a [stock] market trying to absorb the Fed’s tightening and basically trying to put in a low in a bear market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We have [bond] yields that are coming down, and so that’s helping stocks.
‘Market is confused’
On Wall Street, the Nasdaq Composite rebounded by 1.6 per cent, to 11,232 points, as technology and growth stocks outperformed.
The Dow Jones index closed 0.6 per cent higher, at 30,677, and the S&P 500 jumped 1 per cent, to 3,796.
On European markets, Germany’s DAX and Britain’s FTSE fell sharply, by 1.8 per cent and 1 per cent, respectively.
Trading has remained volatile in the wake of the S&P 500 last week logging its biggest weekly percentage drop since March 2020.
Investors are weighing how far stocks could fall after the index earlier this month fell over 20 per cent from its January record high, confirming the common definition of a bear market.
“There is a tremendous amount of uncertainty about the outlook and so the market is confused,” said Walter Todd, chief investment officer at Greenwood Capital in South Carolina.
Copper prices slumped as rising interest rates and weak economic data fed worries about demand.
On the London Metal Exchange (LME), copper was down 4.3 per cent, to $US8,397 a tonne, and hit its lowest since February 2021.
Spot gold dropped 0.8 per cent, to $US1,822.55 an ounce.
On oil markets, Brent crude futures fell 1.7 per cent, to $US109.80 a barrel.
ABC/Reuters
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