Markets around the world are expected to rebound today after a day of heavy losses.
The Australian ASX has bounced back big time following from Wall Street overnight that offset those tremors we saw last week.
Australian shares rushed to an early gain on Tuesday with the ASX 200 up 1.3 per cent, partly retracing the 1.8 per cent dip on Monday as global financial markets steadied after the anticipated moves from the Federal Reserve to thwart inflation.
Wall Street stocks rallied, staging a strong bounce back from last week’s rout.
The Dow last week suffered its worst week since October 2020, dropping 3.4 percent.
It came as the US Federal Reserve shifts towards a more hawkish stance on monetary policy, which could lead to higher interest rates.
That spooked investors last week, and the pain was felt on markets around the world on Monday,.
Fed Chair Jerome Powell is scheduled to appear before a congressional panel, and the markets are bracing for that.
Yesterday, markets across Asia dropped in early trade over inflation concerns
In Japan, the Nikkei slumped 4 per cent, while the Hong Kong Hang Seng dropped 1.45 per cent.
Mainland Chinese stocks were also down.
In South Korea, the market declined under 1 per cent.
The rollercoaster day for Australian investors
Australia’s share market dived in early trading after sharp falls on Wall Street on Monday.
The ASX 200 index fell as much as 1.5% to 7258 points.
It was the biggest decline in four weeks.
Sectors including Financials, Energy and Materials led early falls.
Commonwealth Bank fell 3.9% after a string of record highs in recent weeks.
The other major banks fell more than 2.2%.
Australian dollar is hitting a new low
So why has this happened? A big reason is following similar damage on Wall Street and in European markets which has been triggered by St Louis Federal Reserve president James Bullard predicting US interest rates would rise next year, perhaps earlier than some would expect.
The Australian dollar was firmer on Monday morning, buying around 75.05 US cents, after hitting its lowest level in six months as the US dollar strengthened.
Bullard added to expectations that US interest rates could rise sooner rather than later.
He is one of seven Fed policymakers to predict a first rate hike in 2022.
“This suggests the Fed will move earlier than the RBA and will be moving by slightly more than the RBA over 2023, which has implications for the [Australian dollar],” St George chief economist Besa Deda wrote.
Bitcoin takes a further tumble
Bitcoin fell to a two-week low amid an intensifying cryptocurrency crackdown in China.
The largest virtual currency fell 10% to $32,350 as of 8:50 a.m. in New York. Ether declined 13% to $1,950.
China announced on Monday that it summoned officials from its biggest banks to a meeting to reiterate a ban on providing cryptocurrency services. It’s the latest sign that China plan to do whatever it takes to close any loopholes left in crypto trading.
According to bitcoin aficionado Stephan Livera this latest crackdown, on one of the main regions for bitcoin mining, is the real deal.
This time seems like a more serious time. The largest mining pool operators have come out…so for example the leader of F2Pool (has said) from our numbers we’re seeing a very large drop in the amount of hash rate that’s coming to our pool out of China.”STEPHAN LIVERA, MINISTRY OF NODES
Bitcoin has many complex layers, it’s important to remember we’re talking specifically about bitcoin mining.
Mining is simply the process that sees new bitcoins entered into circulation. It’s also a critical component of the maintenance and development of the blockchain ledger. Mining is performed using very sophisticated computers that solve extremely complex computational math problems.
AI pushes the Nasdaq to a record-breaking close
The Nasdaq achieved a record-breaking close, surpassing its previous record high of 16,057.44, which was established on November 21, 2021.
Artificial intelligence-related technology stocks, such as Nvidia (NVDA.O) and Microsoft (MSFT.O), have greatly boosted the index.
The Nasdaq Composite has increased by almost 7.2% this year.
The tech-focused index surged 43% in 2023, and as chipmakers gained traction and confidence increased that the Fed might achieve a soft landing—that is, curb inflation without inciting a recession—stocks surged strongly by year-end.
In contrast, Nvidia increased by 1.9% on Thursday, bringing its total gain from a year ago to around 250%.
Every S&P 500 subs sector saw a gain at the end of the month.
Analysts at Deutsche Bank report that the index has now increased for 16 of the past 18 weeks, matching the record most winning weeks last attained in 1971.
Bitcoin also moved closer to its all-time high.
The price of the virtual currency momentarily surpassed $64,000 as spot bitcoin ETFs helped drive it to heights last seen in 2021.
Disney sign off on mega merger with India’s largest conglomerate
India’s top conglomerate Reliance Industries and Walt Disney announced the merger of their India TV and streaming media assets, forming an $8.5 billion entertainment juggernaut.
Reliance, led by Asia’s richest man, Mukesh Ambani, will inject $1.4 billion in the merged entity, with the company and its affiliates holding a more than 63% stake, with Disney owning the rest, the companies said in a joint statement.
With two streaming platforms and 120 TV channels, the combined company will be a formidable opponent for competitors like Netflix and Sony of Japan in the $28 billion media and entertainment market, which is expected to grow to $100 billion by the end of the decade.
Disney’s lengthy battle to stop users from leaving its collapsing Indian streaming service and the financial burden resulting from billion-dollar payments for Indian cricket rights before the deal, providing yet another illustration of how difficult it can be for Western companies to expand in India.
“The combined entity will create a sports behemoth in India,” stated Jinesh Joshi, an analyst at Prabhudas Lilladher in India.
“This merger will give Reliance great bargaining power when it comes to negotiating advertisement contracts … For Disney, coming together with a bigger player, in terms of (financial) pockets, will give it a cash cushion,” he continued.
According to the corporations, the combined company will serve the approximately 750 million viewers in India as well as the Indian diaspora worldwide.
According to Disney CEO Bog Iger’s statement, “Reliance has a deep understanding of the Indian market and consumer,” and the acquisition will enable “us to better serve consumers with a broad portfolio of digital services, entertainment, and sports.”
Warner Bros Discovery plans to shutdown popular NZ news network
One of New Zealand’s two free-to-air television networks claimed it will be shutting down all newsroom operations, television news broadcasts and website from June 30, with the loss of up to 200 media jobs.
The once-thriving network, which had been a staple in the New Zealand entertainment industry, is now facing financial turmoil, sending shockwaves through the media landscape.
Warner Bros Discovery, who own the NZ news network, stated the decision comes following further attempts to reduce costs and that meant major changes including the planned shut down of the newsroom.
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