ASX to slide 1.3pc on rate, growth worries

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Australian shares are set to drop at the open after Wall Street slumped to end last month. RBA’s policy decision is on Tuesday, Federal Reserve on Thursday.

US equities investors should expect more volatility, according to Ritholtz Wealth’s Josh Brown. He argues that it’s not complicated: the S“What’s the significance of a clear downtrend for the SP 500 and a monthly finish below this simple moving average? Well, higher volatility – in both directions – is going to become the new normal. We ran the numbers. The fifty best and worst one-day returns for the SP 500 was below the 200-day.

“We now expect the Fed to deliver 3 consecutive 50bp hikes and subsequently hike rates by 25bp per meeting until they reach a terminal funds rate of 3.25 per cent by March 2023.”: “We expect that the FOMC will raise the target rate of the policy range by 50bp to ¾-1 per cent, and will announce that it will start reducing the balance sheet in June through passive runoff with an intention of scaling up to the peak runoff caps within three months.

“Around 60 per cent of the companies beat consensus by at least 5 per cent, while only 15 per cent missed by the same amount. These are, respectively, among the highest and lowest fractions of beats and misses since the GFC, but in line with the post COVID-19 recovery.”Capital Economics is forecasting little nominal economic growth in China in 2022.

 

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