Closing Bell 4th October: ASX Navigates Stormy Waters Tech and Banks Bear the Brunt

RBNZ’s Stance on Interest Rates
The Reserve Bank of New Zealand (RBNZ) has indicated that interest rates might need to remain elevated for a longer duration to bring inflation back to target. Despite this, the bank has not signaled any immediate further tightening. The RBNZ has kept its official cash rate steady at 5.5%. The bank’s comments suggest a reduced likelihood of a rate hike in November. The New Zealand dollar experienced a drop following the announcement.

US Credit Market Concerns
The US corporate credit market is showing signs of strain due to concerns about prolonged high interest rates. Yields on US blue-chip bonds have surpassed last year’s peak, and the speculative-grade bond market is also under pressure. Experts suggest that the market is adjusting to the possibility of sustained higher rates, which could impact smaller companies more than larger ones.

Wall Street’s Rising Anxiety
Wall Street’s indicators of market anxiety, such as the VIX, are reaching levels not seen in months. This comes after job data indicated a stronger labor market, leading to increased speculation about the Federal Reserve raising interest rates. The US 10- and 30-year bond yields have reached their highest levels since 2007, causing further market unrest.