Global Factors influencing ASX stocks on 28 December 2023

On 28 December 2023, at AEDT 12:30 PM, the benchmark index S&P/ASX 200 is trading higher today, gaining 37.60 points or 0.50%, and is currently trading at 7,598.80 levels. Out of 11 sectors, 8 are trading higher along with the S&P/ASX 200. The Materials and Financials sectors were the top 2 gaining sectors, up by 0.81% and 0.45% in their index values.

Also read: Mid-Market: S&P/ASX 200 Trading Higher By 0.46%; Led By Mining And Financials Stocks

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, Dow jones, NASDAQ-100, and S&P 500 ended higher by 0.16%, 0.30%, 0.17%, and 0.14% respectively.

2. Oil prices experienced a nearly 2% decline on Wednesday, offsetting gains from the previous day. Investor attention focused on the Red Sea, where shippers resumed operations despite additional attacks on Tuesday. Danish shipping company Maersk announced plans to send several dozen container vessels through the Suez Canal and Red Sea in the coming weeks. This decision follows a temporary suspension of those routes earlier this month due to attacks by Yemen's Iran-backed Houthi militia. The developments in the Red Sea contribute to the volatility and uncertainties affecting global oil markets.

3. On Wednesday, the dollar declined to a five-month low against the euro and a basket of currencies, driven by expectations of potential U.S. interest rate cuts by the Federal Reserve. However, low holiday trading volumes may lead to exaggerated price moves and muted activity until the New Year. The dollar index, measuring the U.S. currency against six others, dropped 0.48% to 100.98, marking its lowest level since July 27. The index is set for a 2.45% decrease in 2023, following two years of robust gains linked to expectations and actual rate hikes by the Fed to combat inflation.

4. On Wednesday, world stocks surged to their highest level in over a year, and the U.S. dollar reached a five-month low amid growing expectations that major central banks, including the Federal Reserve, would initiate interest rate cuts early next year. Corresponding with the anticipation of reduced interest rates, the benchmark 10-year Treasury yield dropped to a five-month low, while the two-year Treasury yield declined to a level unseen in seven months. This collective movement in financial markets reflects the prevailing sentiment regarding potential shifts in central bank policies and their impact on global financial conditions.

5. The Hang Seng and FTSE 100 is up by 1.74% and 0.36%.

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