On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was a positive performer again. The benchmark index rose 0.2% to 7,527.9 points.
Will the market be able to build on this on Wednesday? Here are five things to watch:
ASX 200 expected to sink
The Australian share market looks set to sink on Wednesday following a poor night in the US. According to the latest SPI futures, the ASX 200 is expected to open the day 54 points or 0.7% lower this morning. On Wall Street, the Dow Jones fell 0.8%, the S&P 500 dropped 1.25%, and the Nasdaq tumbled 2.3%. This was driven by concerns that US Fed hikes will slow the economy.
Oil prices fall
Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a poor day after oil prices dropped. According to Bloomberg, the WTI crude oil price is down 2.6% to US$100.58 a barrel and the Brent crude oil price has fallen 2.1% to US$105.25 a barrel. This follows concerns that COVID lockdowns in China could impact demand.
Wesfarmers sells down Coles stake
The Coles Group Ltd (ASX: COL) share price will be on watch today amid reports that Wesfarmers Ltd (ASX: WES) has sold a $500 million stake in the supermarket giant. According to the AFR, after the market close, Wesfarmers sold 28.2 million shares via a block trade at $17.75 per share. This represents a 1.8% discount to the Coles close price.
Gold price drops
Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued day after the gold price fell. According to CNBC, the spot gold price is down 0.45% to US$1,925.6 an ounce. Rising U.S. Treasury yields and expectations for more aggressive monetary policy tightening by the US Federal Reserve put pressure on demand for safe haven assets.
Allkem remains a buy
The Allkem Ltd (ASX: AKE) share price may have been charging higher this year but one leading broker still sees plenty of upside ahead. According to a note out of Bell Potter, its analysts have retained their buy rating and $18.05 price target on the lithium miner’s shares. The broker said: “AKE is in a strong position to both generate significant free cash flow in the current market strength and to benefit from what we expect to be supply deficits in lithium markets over the medium to long term.”