Volatility is set to return to global sharemarkets this week starting with the ASX, which is bracing for inflation data that could cement an interest rate increase from the Reserve Bank just as investors wait nervously on the next moves from other major central banks.
Wall Street’s S&P 500 and technology-heavy Nasdaq Composite index have been hit even harder; with the benchmarks down 3.7 per cent and 6.9 per cent respectively,, as underwhelming results from Tesla and Alphabet added to fears that the $US1 trillion spending boom on artificial intelligence would be slow to convert into revenue and profits.These concerns will be tested again when Amazon, Meta Platforms , Apple and Microsoft report June quarter earnings this week.
The surprise jump in the yen against both the greenback and the Australian dollar has reverberated across global markets as popular carry trades – whereby investors borrow in a low-interest rate currency like the yen and invest the proceeds in higher yielding assets around the world – are being rapidly unwound, compounding the selling pressure in the tech sector.
Mr Boey said China unease was amplifying the rotation away from big tech and into smaller US stocks, which were largely left behind in the rally that has gripped markets since last November when the Fed first signalled rate cuts in the future.