Global Factors influencing ASX stocks on 21 September 2023

On 21 September 2023, at AEST 11:35 AM, the benchmark index S&P/ASX 200 is trading lower today, declining 36.00 points or 0.50%, and is currently trading at 7,127.30 levels. Out of 11 sectors, 10 are trading lower along with the S&P/ASX 200. The Energy and Health Care sectors were the top 2 declining sectors, down by 1.28% and 1.24% in their index values.

Also read: Mid-Market: S&P/ASX 200 Trading Lower By 0.43%; Dragged Down By Healthcare And Materials Sectors

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 lower in their previous session. NASDAQ Composite, S&P 500, NASDAQ-100, and Dow jones ended lower by 1.53%, 0.94%, 1.46%, and 0.22% respectively.

2. In Asian trade on Thursday, oil prices experienced a decline due to the Federal Reserve's cautionary statement regarding potential increases in U.S. interest rates, prompting investors to secure their recent gains. However, despite this setback, the outlook for crude oil remained positive, driven by expectations of limited supply. The concerns about rising interest rates had an impact on West Texas Intermediate crude futures (WTI), causing them to slip below the US$90 per barrel threshold. Similarly, Brent oil futures, which had reached a 10-month high earlier in the week, also saw a significant drop as the market witnessed a wave of profit-taking activities.

3. On Thursday, the yield on two-year U.S. Treasury notes surged to its highest level in 17 years, reaching 5.1970%. This increase came a day after the Federal Reserve decided to keep interest rates unchanged but adopted a more aggressively hawkish approach to future monetary policy. Simultaneously, the yield on 10-year Treasury notes climbed to 4.4310%, marking a fresh 16-year high.

4. On Wednesday, the Dow ended the day with a decline as rapidly rising Treasury yields created pressure on major tech stocks. This development followed the Federal Reserve's decision to keep interest rates unchanged while adopting a stance that implied rates would remain elevated for an extended period. The Federal Reserve, in its announcement, maintained the current interest rates and retained its projection for one more rate increase later in the year. However, it signalled a shift toward a policy of maintaining higher rates for a more extended period by reducing the number of expected rate cuts for the following year.

5. The Hang Seng is down by 0.62% and FTSE 100 is up by 0.93%.

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