Global shares ease amid Fed statement, ASX futures down 1%

By Simon Herrmann. Published at Jun 11, 2020, in Market Wrap

Global stocks fell on Wednesday after the US Federal Reserve projected a sluggish recovery, while the Nasdaq hit a fresh all-time high.

ASX futures dipped 66 points ahead of trade in Sydney, pointing to a 1.1% fall on the open.

On Wednesday, Australian shares hovered around the flatline to eventually notch out a small gain. The ASX 200 added 0.06% while the All Ordinaries rose 0.1%. Mid-caps outperformed as the Small Ordinaries rose 0.57%.

The local share market looks poised to follow international markets lower as investors around the globe took a breather after a dramatic recovery in equity prices.

In the US, Fed policymakers projected a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year’s end. The key overnight interest rate is expected to remain near zero through at least 2022. The announcement weekend the US dollar against most currencies, including the Aussie dollar which was last traded at almost $0.70 US cents, up approximately 0.5% compared to yesterday.

US market mixed, Europe lower

MSCI’s gauge of stocks across the globe shed 0.27% while the Dow industrials and benchmark S&P 500 closed lower. Technology shares in the Nasdaq rose, extending their winning streak.

The Dow Jones Industrial Average fell 282.31 points, or 1.04%, to 26,989.99. The S&P 500 lost 17.04 points, or 0.53%, to 3,190.14 and the Nasdaq Composite added 66.59 points, or 0.67%, to 10,020.35.

European markets finished mainly lower even though futures initially suggested a day in the black. The Dax and the FTSE opened lower, despite briefly turning positive in the afternoon and ended the day in the red.

The FTSE 100 closed at 6,329.1 points in London, down 0.1%, while the Dax eased 0.7% in Frankfurt to close at 12,530.2 points.

The Asia-Pacific once again threw out mixed results yesterday, as our local market outperformed and the Hang Seng as well as the Shanghai Composite traded lower, down 0.03% and 0.42% respectively. The Nikkei 225 added 0.15% in Tokyo.

The CBOE Volatility Index ended the day unchanged after a 7% lift in the prior 24 hours.

Oil rebounded after declining early in the session, however data showed crude inventories rose to a record high in the US. Investors continue to assess weak demand for oil and the potential for alternative energy sources in the future.

Benchmark copper on the London Metal Exchange (LME) was up 0.8% at US$5,822 per tonne, rising for a fifth straight day.

Gold traded firmly higher after the Fed announcement and was last traded at US$1,736 an ounce.

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