The share market started the new month the way it ended the old one: in retreat after losses on Wall Street accelerated into the close.
The ASX 200 fell 47 points or 0.8% to 5969, positioning the index for a second straight decline as global markets continued to adjust to the prospect US interest rates may be higher than analysts anticipated by the end of the year. Overnight the S&P 500 slumped 1.11% and the Dow a heftier 1.5%, with much of the selling coming in the final hour. The retreat followed an appearance by Jerome Powell before Congress, where the new Federal Reserve chair appeared to suggest rates may increase up to four times this year as the US economy accelerates.
"The volatility is being caused by one overarching theme: The market doesn't know what to expect from the Fed," Tom Essaye, founder of The Sevens Report, told CNBC. "There's uncertainty around that and it's going to continue for the next several months."
A modest rebound in US futures soon faded this morning. S&P 500 futures were recently down 4.25 points or 0.16%. China's Shanghai Composite lost 0.32%, Hong Kong's Hang Seng 0.9% and Japan's Nikkei 1.46%.
Australian losses were spearheaded by the energy sector after crude turned lower. Energy stocks lost 2.1%, telecoms 1.1%, metals & mining 1.2% and financials 0.6%. The gold sector provided a haven, rising 0.5%.
Crude oil futures recouped four cents or 0.07% this morning to US$61.68 a barrel. Gold futures dipped $1.30 or 0.1% to US$1,316.60 an ounce. The dollar was buying 77.31 US cents.
Another market adjustment is underway in the US, but it seems unlikely this one will be as deep as the one at the start of the month. No sense of panic this time around. More of an orderly retreat. Trading: PAB offered a cheap entry before reversing higher for a quick couple of pips. At the slower end, also took a speculator in BLY at obvious horizontal support. Scratching my head at IVX - didn't pick that one at all.
