(AUSTRALIA) – ASX – Shares began the week on a lower note as investors remained watchful of signals from the Federal Reserve (US central bank) regarding possible interest rate increases in light of the rapid surge in oil prices, which disappointed those who had anticipated an end to the tightening cycle.
The US Federal Open Market Committee is set to announce its decision later this week, with expectations that rates will remain in the 5.25 to 5.5 per cent range for the second consecutive meeting.
The Fed will also update its dot plot, reflecting officials’ interest rate projections.
Brent crude hits 10 month high at $94.43 amid supply cuts
Brent crude futures reached a 10-month high of $94.43 a barrel due to supply cuts, prompting policymakers to assess potential energy inflation.
Meanwhile, concerns in China’s debt-laden real estate sector added to market unease, causing Hong Kong-listed property developers to drop by 2 per cent.
China Evergrande Group saw a 20 per cent decline after police detained staff at its wealth management unit, while Chinese trust firm Zhongrong International declared it couldn’t meet some obligations, exposing it to China’s property developers.
On the Australian front, the S&P/ASX 200 closed 0.7 per cent lower at 7230.40 points, with all sectors ending in the red.
The tech sector was the biggest underperformer, declining by 2.6 per cent, echoing a Nasdaq decline on fears of higher interest rates. High-growth tech stocks are often sensitive to rising interest rates and bond yields.
Despite these challenges, opportunities are emerging for investors amidst government economic reforms and policy announcements, which are expected to provide clearer investment direction.
