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ASX: Bad news is good news as shares rally on US jobs wobble

ASX: Bad news is good news as shares rally on US jobs wobble

ASX: Bad news is good news as shares rally on US jobs wobble
Oct 05, 2022 1 min, 6 secs

Further complicating the inflation narrative, the Reserve Bank of New Zealand elected to deliver another 0.5 percentage point rate increase to 3.5 per cent, and confessed it debated tightening by 0.75 percentage points to sufficiently cool price pressures.

The S&P/ASX 200 Index surged 1.7 per cent to 6815.7 points after a 3.8 per cent advance in the previous session.

The S&P 500 surged 3.1 per cent to 3790.9 points, recording its best two-day rise since April 2020.

“Will this domestic dynamic of stepping down [the quantum of rate rises] lead other central banks to think about that course of action.

ANZ said the RBA’s shock decision to lift the cash rate by just 0.25 percentage points at its October meeting on Tuesday would extend the duration of its tightening cycle, and increase the risk that rates need to go higher than previously expected.

The forecaster increased its peak rate projection to 3.6 per cent for May 2023, up 0.25 percentage points from its prior projection of a 3.35 per cent peak.

Hopes that the RBA’s somewhat dovish concession would sway other central banks were tempered after the RBNZ stuck to its script by raising the official cash rate by 0.5 percentage points to the highest level in seven years.

NZ’s benchmark rate has now risen by 3.25 percentage points since the central bank started its tightening cycle in October last year.

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