ASX seesaws after mixed night on wall Street, IMF warns of global recession risks

 ASX seesaws after mixed night on Wall Street, IMF warns of global recession risks

asx seesaws

Australian shares have inched higher in volatile trade. with gains in financials outweighing losses in mining and energy stocks, while caution prevailed ahead of key US inflation data due later in the week.

The ASX 200 was up 8 points or 0.1 per cent to 6,653 at midday. after declining 0.2 per cent in early trade. The benchmark closed down 0.3 per cent on Tuesday.

At the same time. the Australian dollar was down at 62.60 US cents.

Market participants across the world are looking forward to US inflation readings that are expected to show persistently strong price pressures and cement the Federal Reserve's hawkish rhetoric on monetary policy.

Coronado Global Resources was among the top gainers on Australia's benchmark stock index, rising 6.2 per cent to hit a four-month high after the coal miner confirmed that it was in talks with Peabody Energy Corp regarding a potential merger.

Mining stocks, however. fell 0.8 per cent after iron ore prices dropped on Tuesday amid tightening COVID-19 restrictions in China. Mining giants BHP and Rio Tinto dipped 0.2 per cent and 1.4 per cent. respectively.

Financials rose as much as 1.3 per cent, with the Commonwealth Bank. the country's biggest lender, gaining 1.5 per cent. while the remaining so-called "big four" banks climbed between 0.8 per cent and 2.3 per cent.

Bank of Queensland jumped as much as 8.3 per cent and was poised for its biggest single-day gain since February last year. as the lender reported a rise in profit and declared higher dividend.

Energy stocks slumped 0.5 per cent, extending losses to a third session to hit a one-week low. as oil prices fell following a flare-up in COVID-19 cases in China.

Woodside Energy and Santos were down 1 per cent and 1.7 per cent.respectively.

Healthcare and technology stocks were both down nearly 1 per cent. while real estate stocks added 0.3 per cent.

Wall Street mixed

Overnight, the S&P 500 and Nasdaq ended lower, with indications from the Bank of England that it would support the country's bond market for just three more days, adding to market jitters.

Stocks were also volatile ahead of US inflation data and the start of third-quarter earnings later this week.

Bank of England governor Andrew Bailey told pension fund managers to finish rebalancing their positions by Friday, when the British central bank was due to end its emergency support program for the country's bond market.

"What caused the latest downturn was an announcement the Bank of England (BoE) was going to stop supporting the gilt (UK bonds) market in three days," said Randy Frederick, managing director, trading and derivatives at Charles Schwab in Austin.

Earlier on Tuesday, the Pensions and Lifetime Savings Association urged the BoE to extend the bond-buying programme until October 31 "and possibly beyond".

According to preliminary data, the S&P 500 lost 24.86 points, or 0.69 per cent, to end at 3,587.53 points, while the Nasdaq Composite lost 114.28 points, or 1.08 per cent, to 10,427.83. The Dow Jones Industrial Average rose 23.13 points, or 0.08 per cent, to 29,226.01.

Amgen Inc shares jumped and gave the Dow its biggest boost, after a report that Morgan Stanley upgraded the drug maker's stock to "overweight" from "equal weight."

'The worst is yet to come': IMF

On Tuesday, the International Monetary Fund said that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession and threatening financial market stability.

It predicted a meagre 1.6 per cent growth in the US economy this year.

"The three largest economies, the United States, China and the euro area, will continue to stall," Pierre-Olivier Gourinchas, the IMF's chief economist, said in a statement.

The pan-European STOXX 600 index lost 0.6 per cent and MSCI's gauge of stocks across the globe shed 1 per cent.

In commodities, oil prices extended Monday's decline as recession fears and the flare-up in COVID-19 cases in China raised concerns over global demand.

Brent crude settled at $US94.29, down almost 2 per cent on the day.