ASX closed at an eight-week low on Wednesday following hawkish comments from recently-re-appointed Federal Reserve Chairman Jerome Powell.
The benchmark S & P / ASX 200 closed 0.3% lower at 7,235.9 points, where it was in early October.
There was a sudden overnight shift in Mr Powell’s rhetoric, which dragged on Wall Street and left ASX looking for direction. He deleted the phrase “transient” that has been used to describe supply chain-induced inflation and said the US central bank would likely start cutting its stimulus sooner than expected.
Locally, Q3 domestic GDP figures were better than expected and gave the market a boost, but did not prevent it from closing in negative territory.
Meanwhile, COVID-19 was never far from the minds of investors, even though it looked like the new Omicron variant would have less impact than Delta.
“The CEO of Moderna raised questions about the effectiveness of current vaccines and omicron late in Asia yesterday, which halted the recovery in its tracks,” wrote Jeffrey Halley, senior market analyst for Oanda. for Asia-Pacific, in a note to customers.
Jerome Powell, testifying on the Hill yesterday, added to the uproar, removing the word ‘transient’ as his preferred pronoun for inflation, and suggesting that the Federal Reserve could unwind monetary stimulus more quickly than previously announced. The sudden change in direction caught the markets off guard and deepened the unease in the stock markets. ”
The heavily traded Australian dollar hit a one-year low of US 70.63 in the early hours of Wednesday morning, then strengthened.
Iron miners had a strong session with Rio Tinto up 2.4%, BHP up 1.4% and Fortescue up 1.5%. South32 gained 4 percent to hit a four-week high of $ 3.67 while
Lynas Rare Earths closed at a new nine-year high of $ 9.11.
Supermarket giants Woolworths fell 2.4% and Coles fell 1.6%, while fruit and vegetable producer Costa Group hit a 17-month low at $ 2.75 during the day.
ANZ Bank closed 0.2% lower after revealing a new class action lawsuit over credit card contracts. The other three big banks closed higher.
Graincorp gained 2.2 percent after stronger estimates for the winter grain crop.