Global Stock Indices Broadly in Red as Tech Selloff Intensified

Market Reviews

Swiss Franc is the strongest one for today on risk aversion. The US dollar and euro remain weak. Meanwhile, Australian dollar is under broad based selling pressure today, after RBA minutes reiterated the non-urgency for any rate move and IMF report pointed out risks are tilted to the downside in Australia.

On stock markets, major Asian indices are in red following the weakness in the US overnight, as tech selloff intensified. NASDAQ fell 3.03%, DOW closed down 1.56% and S&P 500 lost 1.66%. In Asia, Nikkei is down 1.12%, Hong Kong HSI dropped 1.89%, China Shanghai SSE fell 1.51% and Singapore Strait Times lost 1.18%.

In the concluding statement to its Article IV mission, the International Monetary Fund said Australia's economic expansion was expected to continue, further reducing slack in the economy and paving the way for "gradual upward pressure" on wages and prices. According to the IMF, the balance of risks to Australia's economy are "tilted to the downside" due to a deteriorating global outlook, urging the central bank to keep interest rates low.

The Reserve Bank of Australia (RBA) sounded cautiously upbeat in the minutes of November 6 meeting. It was noted, that “Australian economy had continued to improve and had been a little stronger than expected”. However, “outlook for consumption continued to be a source of uncertainty in an environment of slow growth in household incomes”. Nevertheless, underlying inflation remained “low and stable”, consistent with previous forecasts. Overall, RBA maintained that “the next move in the cash rate was more likely to be an increase than a decrease, but that there was no strong case for a near-term adjustment in monetary policy.”

The Bank of Japan Governor Haruhiko Kuroda ruled out the need to ramp up stimulus. He said that “there’s no need to take additional steps. What’s important is to ensure our policy is sustainable, with an eye on balancing its pros and cons.” He also excluded an early end to the negative interest rate policy. Kuroda remained optimistic that “wage and price growth will likely accelerate” and lift inflation to 2% target eventually. But that change of doing that any time during fiscal 2020 is “slim”.