Australian shares have opened flat, after global equity markets tumbled as frightened investors digested disappointing updates from major central banks about the outlook for inflation and interest rates.
- BoE sees inflation peaking at 7.25 per cent in April
- Meta tanked 26pc in an epic rout on Wall St
- OPEC+ sticks to plan for moderate monthly rises
Meanwhile, a downbeat status update from Facebook owner Meta further worried traders.
The ASX 200 was up 0.2 per cent, to 7,089, by 10:19am AEDT.
News Corp rose 5.9 per cent, to $33.44, after the company reported its highest quarterly revenues since 2013.
However, Nufarm (-2.4pc), Arb (-2.5pc) and Adbri (-2.3pc) were leading the losses in early trade.
The Australian dollar was up, at 71.44 US cents, by 10:12am AEDT.
BoE hikes rates to fight inflation
The European Central Bank and the Bank of England soured investor sentiment around inflation on Thursday.
Europe’s main bourses were down as the BoE delivered its widely expected second interest rate hike in three months, which helped buoy sterling and lift the euro.
The pan-European STOXX 600 index lost about 1.8 per cent and MSCI’s gauge of stocks across the globe shed 1.2 per cent, in response to a seemingly worldwide surge in inflation, analysts said.
The bank raised interest rates to 0.5 per cent from 0.25 per cent on Thursday and nearly half its policymakers wanted a bigger increase to contain rampant price pressures, which the British central bank warned would push inflation above 7 per cent.
Meanwhile, the pan-European STOXX 600 index lost 1.34 per cent and MSCI’s gauge of stocks across the globe shed 0.91 per cent, in response to a seemingly worldwide surge in inflation, analysts said.
‘Like a real earthquake’: Meta drives Wall St down
On Wall Street, Facebook-owner Meta’s dour forecast sent its stock plummeting, abruptly ending a nascent recovery built on upbeat earnings from big tech companies.
In the currency market, the defensive mood dented the dollar after an earlier step to regain its footing. Inflation pressures were weighing on bonds as the ECB kept its policy unchanged as expected on Thursday.
Making only the smallest change to its statement, the ECB removed a clause stipulating that its next policy move could be in “either direction”.
The Dow Jones Industrial Average was down about 1.5 per cent, the S&P 500 index shed more than 2 per cent and the Nasdaq Composite dropped more than 3 per cent.
“We had good results here for European tech … I’m quite surprised by the resilience of the market here.
“I would say I’m not positive for markets moving forward: This is the last quarter when earnings will enjoy such a favourable comparison, year-on-year. [Interest] rates are going up and there’s a major geopolitical risk.”
IG Markets analyst Kyle Rodda said there was even more expected volatility in stocks to come, especially in terms of how far the Federal Reserve will go in tightening monetary policy this year.
“There’s been little resolution to the key Fed questions: How many hikes? What will the pace, size and timing of quantitative tightening be? Until that becomes clearer, volatility should remain heightened.”
On oil markets, prices edged higher, maintaining their upward trajectory built on expectations that supply will tighten further, even after OPEC+ producers stuck to planned moderate output increases.
Brent crude oil was up 1.8 per cent, trading at $US91.07 a barrel, by 10:13am AEDT.