ASX set to recover, bitcoin holds near $US20,000 as investors fear ‘domino effect’

Australian shares are set to finally rebound, after plummeting for seven straight trading days into correction territory on high inflation and recession worries.

ASX futures were up 0.7 per cent, to 6,388 points, by 8:40am AEST on Tuesday.

Local investors will be paying close attention to the words of Reserve Bank Governor Philip Lowe to see whether he offers any hints on the size of the next rate hike (tipped for July 5).

Dr Lowe will deliver a speech at 10am AEST, entitled Economic Outlook and Monetary Policy.

The Australian dollar recovered slightly, to 69.6 US cents, but remains near its weakest level since July 2020. It is partly being weighed down by falling iron ore prices, on worries about the impact of China’s COVID-zero policy.

China is the biggest buyer of Australian iron ore, and the price of the steel-making ingredient has plunged 8 per cent to around $US112 a tonne, according to ANZ data.

“Further falls in iron ore prices can add to downside pressure on the Australian dollar today,” said Commonwealth Bank currency strategist Carol Kong.

Ms Kong also said the local currency can slip further because of the “coming sharp slowdown in the world economy”, and has forecast it will trade within a range of 60-70 US cents for most of the next 12 months.

Meanwhile, the cryptocurrency industry was on edge as bitcoin held just above $US20,000 and investors feared that problems at major crypto players could unleash a wider market shake-out.

Oil prices swung higher in volatile trading, with Brent crude futures rising 0.9 per cent, to $US114.13 a barrel.

Spot gold was little changed in holiday-thinned trading, at $US1,837.46 per ounce.

More volatility ahead

Wall Street was closed for the Juneteenth public holiday, while European markets recovered some of their losses from the recent sell-off.

Posted , updated