ASX Dips Amid Oil Price Surge on Middle East Tensions
The Australian sharemarket started the week on a negative note, but still managed to notch up its fifth straight calendar month of gains. The S&P/ASX200 fell 16.3 points on Monday, down 0.18%, to 9076. Brent crude topped $US90 a barrel, lifting refinery operators Ampol and Viva more than 2.3% each.
IG market analyst Tony Sycamore attributed the early dip in share prices to profit-taking from recent trades, while also cautioning that further Reserve Bank interest rate hikes would put pressure on bank and household-facing stock earnings. Local inflation figures due Wednesday will be closely watched amid fears of stagflation, a toxic combination of low growth and high price growth.
The Australian dollar was trading at US71.61¢ on Monday afternoon, down from US71.99¢ on Friday at 5pm. The reaction in the bond market following US Federal Reserve chair Kevin Warsh's speech was stronger, with the yield on the two-year Treasury jumping to 4.35% from 4.22% just before the speech.
Traders now bet on a nearly 58% probability of a Fed rate hike as soon as next month, up from 35% seen a day earlier. Analyst Josh Gilbert noted that gold and Bitcoin tumbled after Warsh's speech, but predicted that September would be the real test for the so-called 'debasement trade'.