Proactive Investors
Published Feb 14, 2024 09:35
Updated Feb 14, 2024 10:00
The morning catch up: ASX to open lower after US inflation is higher than expected
The ASX 200 is set to open lower this morning following losses in the US market after January US CPI data came in higher than expected.
The consumer price index increased 0.3% last month after gaining 0.2% in December. The core CPI, which excludes food and energy, rose by 0.4% in January for its biggest lift in 8 months.
For the year through January, the CPI increased 3.1% after rising 3.4% in the 12 months through December.
Economists had forecast a 0.2% gain for the month for a 2.9% gain year-on-year. While higher than forecast, annual CPI gains are well down from a peak of 9.1% in June 2022.
In response to the inflation data, the Dow fell by 525 points or 1.4%, its biggest daily drop since March 2023, after falling as much as 757.5 points at session lows. The S&P 500 index also slid 1.4%, while the Nasdaq index lost 287 points or 1.8%.
The Aussie dollar fell as the USD rallied on hopes that US interest rates will remain higher for longer, while the gold price slid below $US2,000 an ounce.
Analysts’ bets for the first rate cut in the US are divided with some expecting a cut in May and others expecting the Fed to wait until June or even later this year if economic growth surprises to the upside.
What happened overnight?
Here’s what we saw (source CommSec):
US markets
US sharemarkets tumbled on Tuesday after a stronger-than-expected US consumer inflation reading drove US bond yields higher, pushing back market expectations for imminent interest rate cuts.
European markets
European sharemarkets closed lower on Tuesday, following the hotter-than-expected US inflation reading, as technology shares dropped 2.7% from a 23-year high.
The continent-wide FTSEurofirst 300 index lost 0.9% and the UK FTSE 100 index shed 0.8%.
Shares of chip firms ASML (AS:ASML), BE Semiconductor and Infineon shed between 3% and 5% after peer Siltronic said it expected its earnings to decline "significantly" in 2024.
Rate-sensitive real estate shares dropped to their lowest since December 1, falling 2.4%.
Currencies
Currencies were weaker against the US dollar in European and US trade.
Commodities
Global oil prices climbed on Tuesday after the US rejected Russian President Vladimir Putin's suggestion of a ceasefire in Ukraine. But a stronger-than-expected US inflation report dimmed prospects that the Fed will cut interest rates soon, limiting crude price gains.
Base metal prices fell on Tuesday as the US dollar strengthened.
The gold futures price fell by US$25.80 or 1.3% to U$2,007.20 an ounce on Tuesday as a stronger-than-expected US inflation report tempered prospects of an early interest rate cut from the US Federal Reserve. Spot gold was trading near US$1,992 an ounce at the US close.
Iron ore futures lifted US15 cents or 0.1% to US$129.02 a tonne
What’s on today?
In Australian company news, AMP, Commonwealth Bank, Computershare, Domain, Downer EDI, Evolution Mining, Fletcher Building, GUD Holdings, IDP Education, Ridley Corp and Seven Group all issue earnings updates. Graincorp hosts an AGM. Dicker Data (ASX:DDR) trades ex-dividend.
On the small cap front
The S&P ASX Small Ordinaries finished 0.07% higher yesterday, while the ASX 200 lost 0.15%.
You can read more about the following throughout the day.
Read more on Proactive Investors AU
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