Wall Street ended higher after wild swings between profit and loss and all eyes are on a possible rate hike by the Reserve Bank later today.
- The Dow Jones index rose 0.3 percent to 33,062, the S&P 500 rose almost 0.6 percent to 4,155 and the Nasdaq rose 1.6 percent to 12,536
- The Reserve Bank meets today and can hike rates for the first time since 2010
- Atlassian co-founder Mike Cannon-Brookes has bought a stake in utility AGL to avoid breaking up the business
It was a volatile night of trading on the New York Stock Exchange, a day before the US Federal Reserve met to consider its next rate move.
US stocks fell 1 percent at times after a sharp sell-off on Friday as investors worried about higher interest rates and slower economic growth.
The Nasdaq turned positive in afternoon trade as investors bought up troubled technology companies.
The benchmark S&P 500 rallied after falling to its lowest level since May 2021, and the Nasdaq fell to its lowest level since November 2020 during the session.
At the close, the Dow Jones Industrial Average was up 0.3 percent to 33,062, the S&P 500 was up almost 0.6 percent to 4,155 and the Nasdaq was up 1.6 percent to 12,536.
Yields, or yields on the benchmark 10-year US Treasury, hit 3 percent for the first time in more than three years.
The 10-year yield is an important barometer for mortgage rates and other financial instruments.
It has risen sharply over the past two months as the bond market braced for the Federal Reserve to trim its balance sheet, which grew to nearly $9 trillion as the Federal Reserve bought bonds to boost the economy during the pandemic .
The Fed meets this week and is expected to hike interest rates by 50 basis points to between 0.75 percent and 1 percent to deal with the sharpest rise in prices in 40 years.
All eyes on RBA
The Reserve Bank is scheduled to hike interest rates today for the first time in 11 years in a bid to stem rising inflation, which is running at an annual rate of 5.1 percent.
Most recently, the central bank raised the official interest rate by 0.25 basis points (0.25 percent) in November 2010, taking the OCR to 4.75 percent.
Official interest rates were cut to a record low of 0.1 percent in 2020 as an emergency response to the coronavirus pandemic.
Westpac’s Imre Speizer said in a research note that the bank had predicted that the RBA would hike interest rates by 0.15 percent to 0.25 percent today, which is also in line with the market’s forecast.
The Australian dollar fell 0.2 percent to 70.49 US cents, with the greenback nearing a 20-year high against a basket of currencies ahead of the Fed’s expected rate hike this week.
As of 7:00 a.m. AEST, the ASX SPI 200 index was down 0.4 percent at 7,297.
Yesterday, the ASX 200 index fell 1.2 percent to 7,347.
Tech billionaire becomes largest AGL investor
Tech billionaire Mike Cannon-Brookes has bought 11.3 percent of AGL Energy and has become the largest shareholder through his private investment firm Grok Ventures.
In a letter sent to AGL’s board last night, he said he would vote against a proposed split, calling it a “flawed plan”.
“Grok Ventures has acquired a greater than 11 percent interest in AGL, becoming the largest shareholder,” Mr. Cannon-Brookes tweeted.
It comes two months after the company rejected its takeover bid.
AGL is Australia’s largest electricity producer and largest emitter of greenhouse gases.
Yesterday, AGL told shareholders it remains committed to the demerger, which would split the company into a separate energy retailer and power producer.
In a statement to ABC, an AGL spokesman said the company has not been contacted by Grok Ventures.
“The AGL Energy spin-off is on track to be complete by the end of next month,” the spokesman said.
EU ban on Russian oil looms
Oil prices rose overnight on continued concerns over supply shortages as the European Union considers a ban on Russian crude over Ukraine’s invasion.
Diesel prices rose 5 percent to $4.0172 a gallon as low supply in global inventories put pressure on oil prices.
Brent crude was up 0.6 percent at $107.62 a barrel as of 7:00 a.m. AEST.
Earlier in the session, Brent and West Texas Crude fell on news that the European Commission could save Hungary and Slovakia from a Russian oil embargo as it prepares to complete its next round of sanctions against Russia.
The EU intends to ban Russian oil imports, a key source of revenue for Russia, by the end of 2022.
Hungary and Slovakia are heavily dependent on Russian fossil fuels.
Spot gold slipped 1.8 percent to $1,862.37 an ounce.