$30b boost: ASX soars on back of Wall Street’s wild session

The Australian dollar suffered sharp swings overnight, touching a low of 61.70 US cents before rebounding. It was fetching 63.10 US cents at 12.15 pm AEDT.

On Wall Street, the S&P 500 closed 2.6 per cent higher, a stunning reversal after earlier being down as much as 2.4 per cent and touching its lowest level in nearly two years. The Dow Jones soared by 2.8 per cent and the Nasdaq jumped by 2.2 per cent.

Besides stocks, prices also initially tumbled for bonds and cryptocurrencies in the knee-jerk reaction to a disappointing report from the US government on inflation. One component that’s closely followed by policymakers and investors accelerated to its hottest level in 40 years.

That forced investors to brace for continued, big hikes to interest rates by the Federal Reserve to get inflation under control, and the potential recession those moves could create.

The Dow’s swing of more than 1,300 points during the day was its largest since March 2020, as was S&P 500’s percentage move from low to high.

Stocks in Europe also flipped from losses caused by the US inflation data, while Treasury yields pulled back from their initial surge. The value of the US dollar against other currencies sank after initially jumping.

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They’re the latest jagged, back-and-forth moves for markets, which have been swinging sharply due to all the uncertainties about economies around the world and how badly higher interest rates will hurt them.

Analysts said some data points buried deep within the inflation report may be offering hope that inflation is on its way to marking a peak and then easing, even though current conditions look dour. Others said technical reasons could also be helping to support markets, as some investors closed out of trades betting on declines following the inflation report.

“Markets have talked themselves off a ledge, so to speak, and they’re a bit more hopeful,” said Kristina Hooper, chief global markets strategist at Invesco.

with AP

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