Pre-Market Report – Tuesday 6th August - SPI down 27 - US markets fall around 3% - RBA today - Japan in Focus

Market Updates

Wall Street finished deep in the red overnight, hit with a renewed bout of volatility on talks about a US economic recession and a wave of institutions unwinding popular carry trades in Japan. The S&P 500 plunged 3%, its worst daily fall in about two years, down ~8.5% from its peak. The NASDAQ plummeted 3.43%, and the Dow lost 1,034 points (2.60%). Down 1,238 points at worst. Small caps Russell 2000 fell 3.33%, and Wall Street's "fear gauge", the VIX, surged 64.90%. At one point, it registered its largest daily spike since 1990. Japan's TOPIX fell 12%, recording its biggest three-day fall stretching as far back as 1959 as institutions rushed to unwind their carry forward trades (See Marcus Take for in-depth analysis). In Fed Speak, Chicago President Goolsbee attempted to downplay recession fears, stating that the Fed does not react to one month's numbers on jobs and can wait for more data before the September meeting. Meanwhile, the probability of a September rate cut now sitting at 83%, according to the CME FedWatch Tool. The gap between 10Y and 2Y yields briefly turned positive for the first time since July 2022 before later inverting, with the 2Y now ~12bps above the 10Y yield. USD Index slid 0.46%, and bitcoin tumbled 7.15%.

ASX to fall. SPI Futures down 27 points (-0.36%).
COMMODITIES

• Oil falls as global equities selloff offsets rising Middle East tensions.
• Gold slips over 1% as wider market rout spills over.
• Global growth angst pushes copper to 4-1/2-month low.
• BHP requests state mediation with Escondida union in Chile.
• Glencore to pay $152mn to resolve Swiss bribery investigation.