HomeAustraliaASX falls following Wall Street slump; $A retreats

ASX falls following Wall Street slump; $A retreats

Investors were reviewing the latest data on the jobs market. More Americans filed for unemployment benefits last week, the largest number in four months, according to the US government. But the labour market remains strong in the face of persistent inflation and a slowing overall US economy.

Wall Street is watching employment data very closely as the Fed remains determined to raise interest rates to try and tame the hottest inflation in four decades. Investors are concerned that the Fed could go too far with its rate increases and push the economy into a recession.

The job market has been a particularly strong area of an otherwise slowing economy. Any sign that it’s weakening could factor into the Fed’s future decisions to either remain aggressive or ease up. Government employment data released on Tuesday indicated that the job market may be cooling. A more closely watched monthly employment report, for September, will be released on Friday.

More broadly, the global economy has also been hit hard by record inflation and lingering uncertainty over Russia’s invasion of Ukraine. That conflict continues to hang over energy costs worldwide, but especially for Europe. The International Monetary Fund is once again lowering its projections for global economic growth in 2023 and said the risks of a recession are rising.

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Investors will soon get more information on just how hard inflation is squeezing businesses and consumers when companies start reporting their third-quarter financial results this month. More importantly, Wall Street will be listening closely to what executives say about expectations for the remainder of the year and into 2023.

AP

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