ASX opens weaker after Wall Street loses more ground



Communications services stocks, technology companies and retailers were among the biggest losers overnight. Disney slid 4.8 per cent, Microsoft fell 1.7 per cent and Home Depot dropped 1.9 per cent lower.

Facebook’s parent company, Meta, fell 4.1 per cent after the European Union accused the company of breaching antitrust rules by distorting competition in the online classified ads business.

US crude oil prices rose 1.2 per cent. European markets mostly rose, while Asian markets closed lower overnight.

Treasury yields gained ground. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.58 per cent from 3.49 per cent late Friday.

Investors have several economic reports to review this week as they try to determine the continuing path of inflation.

The National Association of Realtors delivers its November tally of US home sales Wednesday. Home sales have been falling, but prices in the housing market have remained strong.

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The Conference Board will release its consumer confidence report for December on Wednesday. Consumer confidence and spending has been another strong area of the economy, but inflation is starting to put a tighter squeeze on consumers.

The government will release a closely watched monthly snapshot of consumer spending on Friday, the personal consumption expenditure price index for November. The report is monitored by the Fed as a barometer of inflation.

The Fed ended its final meeting of the year last week by raising its short-term interest rate by half a percentage point, its seventh straight increase this year. More importantly, it signalled that it may have to maintain high interest rates longer than Wall Street had been anticipating in order to tame inflation.

The federal funds rate stands at a range of 4.25 per cent to 4.5 per cent, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5 per cent to 5.25 per cent by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

Inflation is showing signs of easing, but at a relatively slow pace. The Fed’s aggressive policy risks hitting the brakes on the economy too hard, while at the same time economic growth is already slowing because of pressure from inflation. That could result in a recession, which analysts expect in some form within 2023, though the severity and duration is difficult to forecast.

With AP



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