ASX to slide, Wall Street tumbles on US-China tension, economic uncertainty

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Australian stocks are expected to open lower as continued economic uncertainty and US-China tensions weighed on global market sentiment.

The arrival of US House of Representatives Speaker Nancy Pelosi in Taipei despite warnings from Beijing has prompted China to launch warplanes and buzz across the Taiwan Strait in protest.

ASX futures were down 0.3% at 6,889 points as of 7:20 a.m. AEST.

The Australian dollar fell 1.5% to 69.2 US cents.

Much of those losses occurred yesterday, after the Reserve Bank raised its cash rate target by 0.5 percentage points, bringing the new rate to a six-year high of 1.85% .

The weakening Australian dollar was also boosted by a stronger US greenback as investors piled into currencies seen as “safe havens”.

In that regard, the Japanese yen jumped 0.9% against the greenback and was on course for a fifth day of gains, its longest winning streak since 2020.

“There is uncertainty surrounding Pelosi’s trip to Taiwan and there is additional data regarding economic weakness,” said Sam Stovall, chief investment strategist at CFRA Research.

“As for the recession [in the United States]it’s not a question of “if” but of “when” and how deep.”

“An open question” on further rate hikes

On Wall Street, the S&P 500 slipped 0.7% to end the session at 4,091 points.

The Nasdaq fell 0.2% to 12,349, while the Dow Jones index fell 1.2% to 32,396.

On the economic side, a report from the Labor Department showed that job openings in the United States fell 5.4% in June, a sign that the labor market is weakening amid slowing demand. .

Since the US Federal Reserve raised interest rates by 0.75 percentage points in July, investors have been wondering if the central bank’s biggest hikes are already behind it.

“The market must be really comfortable having fully priced in all of the Fed’s rate hikes, and I think that’s still an open question,” Rob Haworth, senior investment strategist at US Bank Wealth Management, told Reuters. Seattle.

“The supply challenges and constraints aren’t necessarily over. They aren’t over yet and are gone.”

Oil prices fell ahead of the OPEC+ meeting of oil producers due this week, the outcome of which could mean an increase in global crude supply, while lingering recession fears helped limit those gains.

Brent crude futures fell 0.4% to $99.63 a barrel.

Spot gold fell 0.7% to $1,760.24 an ounce.

ABC/Reuters

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