ASX to drop after US stocks slump for a second day

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Australian shares are expected to decline when the market opens. Wall Street fell in thin holiday trading as hopes for a year-end rally dimmed.

Australian shares are expected to decline when the market opens, after Wall Street fell in thin holiday trading as hopes for a year-end rally dimmed.The Australian dollar was up 0.4 per cent to US67.60¢.The yield on 10-year US Treasuries advanced 0.02 per cent to 3.86 per cent.

The still-cautious mood is damping hopes for a rally in the last trading week of the year after a brutal 12 months for financial markets. Global equities have lost a fifth of their value, the largest decline since 2008 on an annual basis, and an index of global bonds has slumped 16 per cent. The dollar has surged 7 per cent and the US 10-year yield has jumped to above 3.8 per cent from just 1.

To try to revive Hong Kong as a finance hub, the city will end some of its last major COVID-19 rules, scrapping gathering limits to vaccination checks and testing for travellers. Still, while the dismantling of COVID-19 curbs may be a boost for the global economy, there is concern about inflation pressures that could prompt the policymakers in the US to maintain tight monetary policy.

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