UK braces for long recession after biggest rate hike in 27 years, ASX climbs to two-month high

UK braces for long recession after biggest rate hike in 27 years, ASX climbs to two-month high

Australia’s stock market has risen to its highest level since early June, even as oil prices plummeted overnight as the Bank of England announced its biggest rate hike in 27 years and warned of a long recession for the UK.

The ASX 200 closed 0.6 percent higher at 7,016 points on Friday.

The benchmark index is also up 1 percent over the past five days, posting three consecutive weeks of gains.

As of 4:20pm AEST, the Australian dollar was trading at 69.6 US cents after gaining 0.2 percent overnight. This was mainly due to a weaker US dollar.

It came after a lackluster session on Wall Street, which saw the Dow Jones Index fall 0.3 percent to 32,727 points, the S&P 500 fell 0.1 percent to 4,152 and the Nasdaq Composite rose 0.4 percent to 12,721 .

“The market is looking for direction after a strong recovery that has assuaged the deep pessimism that had pervaded markets,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

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The Reserve Bank is raising interest rates for the fourth straight month(Rhiana Witson)

“Many signs point to it [US] Inflation has peaked and the question now is how fast it will fall or if stickier components will keep it higher than the Fed [Federal Reserve] is comfortable with.”

Oil traders also worried about recession fears and the possibility that it could lower energy demand, as crude prices fell to their lowest levels since Russia’s invasion of Ukraine in February.

Brent crude fell 3.6 percent to $93.34 a barrel, while US West Texas crude fell 2.3 percent to $88.54.

Spot gold rose 1.5 percent to a monthly high of $1,792 an ounce.

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Lithium and electric battery stocks were the top performers today, including Novonix (+13.7%), Liontown Resources (+6.7%), Core Lithium (+6.2%), along with gold miners Rameilius Resources (+6, 7 percent) and Silver Lake Resources (+6.6 pcs.).

On the other hand, the biggest losses were in local technology stocks Megaport (-7.1 percent), Block (-6.2 percent), Hub24 (-3.1 percent) and companies in the energy sector such as New Hope Corporation (-5, 4 percent) and Whitehaven recorded coal (-3.5 percent), Viva Energy (-3.8 percent) and Beach Energy (-2.8 percent).

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