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ASX slips, Wall Street drops, huge inflation jump expected

·Contributing editor
·4-min read
Inflation data is expected to show a jump in prices as the COVID-19 outbreak worsens in NSW. Source: Getty/Yahoo Finance
Inflation data is expected to show a jump in prices as the COVID-19 outbreak worsens in NSW. Source: Getty/Yahoo Finance

Good morning.

Here's everything you need to know about finance markets for today.

ASX: The Australian share market is poised give back some of its gains on Wednesday. This follows a poor night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 21 points or 0.3 per cent lower this morning.

Wall Street: US stocks have ended lower, led by declines in the Nasdaq, as investors were cautious before results from top tech and internet names and a Federal Reserve announcement. The Dow Jones Industrial Average fell 101.19 points, or 0.29 per cent, to 35,043.12, the S&P 500 lost 20.6 points, or 0.47 per cent, to 4,401.7 and the Nasdaq Composite dropped 180.14 points, or 1.21 per cent, to 14,660.58

AUD: The Australian dollar is trading at 0.7365 to the US dollar as at 7.20am this morning.

Oil: Energy producers will be on watch on Wednesday after a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is down 0.2 per cent to US$71.79 a barrel and the Brent crude oil price is up 0.1 per cent to US$74.58 a barrel. Undersupply forecasts were offset by COVID-19 concerns.

Gold: Gold miners will be on watch after the gold price traded flat. The spot gold price is fetching US$1,798.8 an ounce. Traders are awaiting comments from the US Federal Reserve when it emerges from its two-day meeting on Wednesday.

Crypto: Bitcoin took a breather on Tuesday after a near-20 per cent price rally over the past few days. The cryptocurrency declined from $40,000 resistance as Amazon denied rumors it will accept bitcoin payments. Bitcoin was trading around $37,000 at press time and is down about 4 per cent over the past 24 hours.

Inflation spike: The latest annual inflation figures are expected to show a huge jump in prices, particularly for fuel, and growing well above the Reserve Bank of Australia's two to three per cent target band. But RBA governor Philip Lowe won't be reaching for his interest rate lever to stem the tide, being more concerned about what damage recent and ongoing virus lockdowns have done to Australia's economic recovery.

Amazon responds: Amazon has responded to a rumour about Bitcoin that helped send the market into a frenzy – before it settled back down again. Over the weekend, speculation began that the company was looking to move into supporting bitcoin, potentially for payments. Given the extra legitimacy and promotion the move would make, it helped support the price of all cryptocurrencies, which made huge gains over Monday.

New cold war? Former Australian prime minister Tony Abbott says the UK needs to be wary about its relations with the Chinese government amid indications of a new cold war. Abbott, who is a UK government trade adviser, said the Asian economic powerhouse was weaponising trade and urged the UK to guard against selling key businesses to Chinese firms or even collaborating at higher education level.

SA businesses rebuild: South Australia has emerged from its week-long COVID-19 lockdown with the state's peak business group saying it's time for traders to "rebuild once again". Business SA chief executive Martin Haese says 2500 emergency support payments have already gone out to local companies that are unlikely to salvage any of the money lost from the forced closure over the past seven days.

Aussie wine: Australia has warned that Chinese tariffs on bottled wine exports could cost the industry at least $2.4 billion over the five years through 2025 if there are no efforts to expand in other markets. Chinese imports of Australian wine will “cease entirely” as a result of crippling anti-dumping duties imposed by Beijing last year, according to government forecaster Abares. The move, which effectively shut down access to the industry’s biggest market, will see export values in 2025 plunge by $480 million if the sector doesn’t grow trade with other countries.

Have a great day.

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