Global Factors influencing ASX stocks on 02 November 2023

On 02 November 2023, at AEDT 12:30 PM, the benchmark index S&P/ASX 200 is trading higher today, gaining 81.80 points or 1.20%, and is currently trading at 6,920.10 levels. Out of 11 sectors, 9 are trading higher along with the S&P/ASX 200. The Information Technology and A-REIT sectors were the top 2 gaining sectors, up by 2.61% and 2.49% in their index values.

Also read: Mid-Market: S&P/ASX 200 Trading Higher By 1.18%; following US FED left rates on hold

On that note, let us look at a few global reasons impacting the stock market today:

1. Some of the key U.S. indices ended higher in their previous session. NASDAQ Composite, NASDAQ-100, Dow jones, and S&P 500 ended higher by 1.64%, 1.77%, 0.67%, and 1.05% respectively.

2. On Wednesday, the Dow closed higher as Treasury yields dropped following the Federal Reserve's decision to maintain steady rates for the second consecutive meeting. Despite the persistent threat of robust economic growth, the Fed opted to keep rates unchanged. The central bank acknowledged the strong third-quarter economic expansion, stating, "Recent indicators suggest that economic activity expanded at a strong pace in the third quarter." Specifically, the yield on the two-year Treasury, a metric highly responsive to Fed policy, fell by 12.5 basis points to 4.93%, marking its lowest level since September.

3. The oil market's bullish momentum has been disrupted by the sharp decline in crude prices in October. Even with the Federal Reserve indicating that current US interest rates might not be sufficient to control inflation effectively, there's no relief in sight. The Fed is still below its 2% annual inflation target, with the most recent data on US personal consumption expenditure showing a rate of 3.4%. This suggests the possibility of another rate hike as early as December, leading to a continued decrease in crude prices for the third consecutive day.

4. The Bank of England appears poised to maintain its borrowing costs at a 15-year high this Thursday and is likely to indicate that there are no plans for a reduction in the near future. This decision comes as the bank continues its struggle against the highest inflation rate among the world's affluent economies. Despite economic challenges that some interpret as indicators of an impending recession, the BoE is anticipated to retain the Bank Rate at 5.25% for the second consecutive meeting. This decision follows 14 consecutive rate hikes, as indicated by a Reuters poll of economists conducted last week.

5. The Hang Seng is down by 0.06% and FTSE 100 is up by 0.28%.

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