Australian shares have ended the session higher on Wednesday, despite mining and energy stocks being hit by subdued commodity and metal prices following fresh COVID-19 curbs in China.
The ASX 200 closed up 15 points, or 0.2 per cent, at 6,622.
By 4:23pm AEST, the Australian dollar was down at 67.53 US cents.
Both the Bank of Korea and the Reserve Bank of New Zealand (RBNZ) raised interest rates by half a percentage point on Wednesday.
Leading declines on the ASX 200, energy stocks receded 1.8 per cent, their biggest drop in a week, as oil prices fell on weak demand in top crude importer China and a strong dollar.
Index heavyweights Woodside Energy and Santos shed 2.9 per cent and 1.3 per cent respectively.
Domestic miners erased as much as 0.6 per cent as iron ore prices fell on persistent demand woes in top metal consumer China.
Sector majors Rio Tinto and BHP Group skidded 1.4 per cent each, while Fortescue Metals firmed 0.6 per cent.
Bucking the trend, financials added as much as 0.7 per cent, with Macquarie advancing 2.2 per cent.
However, ANZ lost 1.2 per cent after the company confirmed it was in discussions with US private-equity firm Kohlberg Kravis Roberts & Co (KKR) about a potential acquisition of MYOB.
MYOB is one of Australia’s leading providers of business management, financial and accounting solutions for SMEs, enterprise and accounting practice customers.
ANZ said it would make an announcement to the market if the negotiations were successfully completed and an agreement was entered into.
The technology sub-index was a bright spot, jumping 1.2 per cent. Shares of network services provider Megaport and accounting software producer Xero gained as much as 7.3 per cent and 1.3 per cent respectively.
Gold stocks gained 0.5 per cent despite weak bullion prices pressured by strength in the dollar.
Sector leaders Northern Star Resources firmed 1.7 per cent while Newcrest Mining slipped 1.2 per cent.
On oil markets, Brent crude was down, trading at $US99.25 a barrel at 4:31pm AEST.
US dollar reaches parity with euro
The euro rebounded on Tuesday after sliding to a 20-year low and nearing parity against the US dollar as investors worried that an energy crisis in the region would bring on a recession.
By 4:32pm AEST, the single currency was at $1 against the greenback, the lowest since December 2002.
"The US economy remains the most resilient relative to the eurozone and others within the G10 universe," Pepperstone research strategist Luke Suddards said in an analysis.
"With global recessionary clouds rapidly forming, [the US dollar] is the default portfolio hedge and therefore benefits from safe-haven flows.
"The final push to parity came from fears over gas supplies being turned off in their entirety as the Nord Stream 1 pipeline closes from July 10-21 to undergo maintenance.
"A decisive move below parity could see a wave of forced selling as stop losses are triggered. The trapdoor lower could really open then — 0.95 seems to be the next major level on the downside."
Wall Street slumps
Overnight, Wall Street ended in negative territory as growing signs of recession kept buyers out of the equities market ahead of inflation data.
While all three major US stock indexes seesawed between modest gains and losses earlier in the session, they turned sharply lower late in the day as Wednesday's Consumer Prices report from the Labor Department drew near, with big bank earnings looming later in the week.
"[Investors are] waiting to hear what happens with CPI and earnings," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, in Milwaukee, Wisconsin.
"For several months we've swung back and forth between inflation fears and recession fears, almost on a daily basis."
"We have really confused investors who have chosen to go on a buyers strike," Mr Schutte added. "I don’t hear many people saying 'buy the dip.'"
While the CPI report is expected to show inflation gathered heat in June, the so-called "core" CPI, which strips away volatile food and energy prices, is seen offering further confirmation that inflation has peaked, which could potentially convince the Federal Reserve to ease on its policy tightening in autumn.
Paul Kim, chief executive officer at Simplify ETFs in New York, expects year-on-year topline CPI to "be in the high eight or potentially even nine percentage range, and with inflation that high, the Fed has only one thing in mind."
Worries that overly aggressive moves by the Fed to reign in decades-high inflation could push the economy over the brink of recession were exacerbated by the steepest inversion of the 2-year and 10-year Treasury yields since at least March 2010, a potential signal of near-term risk and economic contraction.
The market expects the central bank to raise the key Fed funds target rate by 75 basis points at the conclusion of its July policy meeting, which would mark its third consecutive interest rate hike.
The Dow Jones Industrial Average fell 193 points, or 0.6 per cent, to 30,981, the S&P 500 lost 36 points, or 0.9 per cent, to 3,819 and the Nasdaq Composite dropped 108 points, or 1 per cent, to 11,265.
Meanwhile, the pan-European STOXX 600 index rose 0.5 per cent and MSCI's gauge of stocks across the globe shed 0.2 per cent.
ABC/Reuters
