ASX set to drop after Wall Street falls | Iron ore price slumps
Australian shares are set to drop sharply today on the heels of a bad day on both Wall Street and European exchanges.
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The ASX is expected to open lower today after Wall Street was hammered overnight.
The S&P/ASX 200 index was down 1.5 per cent yesterday, with miners, banks, healthcare and retail stocks giving ground.
Aussie shares are set to drop further today, following Europe and the US into the red.
ASX futures were down 84 points this morning, pointing to another weak day.
The price of iron ore is also down US$6.30 or 5.3 per cent to US$112.35 per tonne.
US stocks had a bad day on Tuesday, with poor consumer confidence data, rising bond yields and fears of a debt default causing indices to sink sharply.
Trading started on a sour note when the Conference Board reported its US consumer confidence index slumped for the third straight month as the fast-spreading Delta variant of Covid-19 made Americans wary of economic conditions.
There was little apparent progress throughout the day in Washington, where politicians must approve both a resolution to keep the government running and an increase in the debt ceiling to prevent a default, which the Treasury warned could come around October 18.
The impasse fuelled a sell-off on Wall Street, and the benchmark Dow Jones Industrial Average closed 1.6 per cent lower at 34,299.99.
The broadbased S&P 500 fell two per cent to 4,352.63, while the tech-rich Nasdaq Composite Index lost 2.8 per cent to 14,546.68.
Analysts at Wells Fargo pointed to an increase in yields on US Treasury bonds, saying they were “inciting a perceived ‘risk off’ mood”. The benchmark 10-year bond was yielding nearly 1.55 per cent shortly after markets closed.
Traders are looking ahead to Thursday’s joint testimony before Congress by Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell.
Ms Yellen will likely again warn of the dire consequences that would follow from Congress failing to raise America’s debt ceiling, and also face questions about President Joe Biden’s twin proposals to overhaul US infrastructure and social services at the cost of trillions of dollars.
Mr Powell may comment on the central bank’s plans to cut back on its massive monthly purchases of bonds and other securities, which was first implemented last year to help the economy as the pandemic began.
That program has been criticised for fuelling inflation, though last week, central bankers said it may “soon” be time to starting slowing them.
- with AFP
Originally published as ASX set to drop after Wall Street falls | Iron ore price slumps
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