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Economic slowdown fears weigh on markets; all eyes on U.S. Fed.

Dec 16, 2018 | Market Updates

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Fears of a global economic slowdown saw investors retreat from Wall Street on Friday, with stocks tumbling to fresh lows. The Dow Jones plunged almost 500-points, to its lowest level since May. The S&P 500 fell 50 points or 1.91%, to its lowest level since April. For the year, the Nasdaq is only up 0.11% after slipping 159 points in the session.

The sell-off comes after China reported weaker-than-expected retail sales data and industrial output numbers, sparking concerns the powerhouse economy may be slowing. The latest data combined with ongoing uncertainty over a trade deal being resolved between China and the United States has also played a role in market confidence.

As a result, the local share market is set to open the week lower with the SPI Futures down 32-points at 0830 AEDT. The Aussie dollar is also lower at 71.73 US cents and 81.34 JPY, it’s lowest level since November 12.

The biggest influence on markets this week will be the U.S. Federal Reserve meeting, early Thursday morning local time. Chairman Jerome Powell is largely expected to increase the cash rate from 2.25% to 2.50% during the December meeting. Markets could be slow-moving until this time.

The Fed isn’t the only central bank to meet this week, with the Bank of Japan and Bank of England also due to deliver monetary policy statements on Thursday. Locally, the Australian Bureau of Statistics will reveal its latest unemployment rate data, which is tipped to remain at 5%.

 

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