The ASX has fallen today, shedding 0.85% or 65.00 points to 7,538.60 as it mirrored Wall Street’s losses.
The hot topic was once again interest rate cuts, which markets fear will be pushed further back by a slowdown in the reduction of inflation globally.
Consumer prices in the US rose 3.1% in January, dashing hopes the inflation index would fall below 3% for the first time in three years.
Expectations for rate cuts were pushed back given this new information, sending US share markets into a sharp decline.
In Australia, all but one of 11 sectors were in the red; only Industrials managed to make any progress, gaining 0.19%.
The worst affected sectors were Financials and Tech, down 1.43% and 1.28% respectively.
Precious metals were also down between 3.84% and 1.36%, while Oil (+1.08%) aluminium (+0.43%), nickel (+1.38%) and tin (+2.69%) gained.
The bottom-performing stocks of the ASX200 today were Graincorp Ltd, down 12.06%, and Fletcher Building Ltd, down 8.65%.
The index has lost 1.01% for the last five days, undoing much of recent gains, but is virtually unchanged over the last year to date.
US CPI fails to fall as far as expected
Capital.com senior market analyst Daniela Hawthorn explains why the latest CPI data has undercut markets.
“The stronger data pushes back on the hope of a rate cut from the Federal Reserve any time soon. Markets are now expecting the Fed to keep rates unchanged in March,” Hawthorn explained.
“In all honesty, for a central bank that admitted they were too slow in hiking rates when the cycle first started which allowed inflation to get too high, I find it hard to believe that the Federal Reserve is going to start cutting at the first chance they get—even if Powell’s comments have been slightly misleading in the past.
“We’ll likely have to wait for the second half of the year for the Fed to start cutting, but the issue isn’t so much whether the bank will cut rates this year, as that is an almost certainty at this point, but how many rate cuts there will be.
“The year started with 150 basis points (bps) of cuts being priced in. That has now dropped to 96 bps – or just under four 25bps cuts. But it's likely to continue dropping over the coming months, getting closer to something like two cuts, three at most, and that is assuming that economic data really worsens from here on out.
“Meanwhile, US equities have pulled back from their recent highs as the higher CPI reading pushes back on some of the risk appetite driving stocks higher in recent weeks.
“There doesn’t seem to be as much of an inverse correlation between strong economic data and stocks as there has been in past months, which suggests the pullback could be limited.
“That said, equity indices were looking very overbought in recent sessions so the pullback is likely neither unexpected nor unwelcomed.
“The S&P 500 is shying away from the 5,000 mark but the ascending trendline in the RSI suggests short-term support is likely to arise."
The Five at Five
Mako Gold increases SPP four-fold to $2 million on fielding overwhelming support
Mako Gold Ltd (ASX:MKG) has received overwhelming support from eligible shareholders for a share purchase plan (SPP) and has increased the offer to $2 million from the originally intended $500,000.
Read more
Syntara adds new blood cancer indication to SNT-5505 development plan following government grant
Syntara Ltd (ASX:SNT) will undertake a new Phase 2 trial evaluating the combination treatment of SNT-5505 and chemotherapy in patients with low and intermediate risk myelodysplastic syndromes (MDS), a group of blood cancer which affect blood cell production in bone marrow.
Read more
St George Mining delineates multiple large lithium soil anomalies at Mt Alexander
St George Mining Ltd (ASX:SGQ) has identified multiple new, large-scale lithium soil anomalies at its flagship Mt Alexander Project in Western Australia.
Read more
NickelX diversifies portfolio with uranium prospects staked in Ontario's prolific Elliot Lake district
Explorer NickelX Ltd (ASX:NKL) is moving into the uranium space, diversifying its portfolio with the acquisition of 100% ownership rights to four highly prospective uranium targets.
Read more
Torque Metals observes thick spodumene intervals in RC drilling at New Dawn
Torque Metals Ltd (ASX:TOR) continues to strengthen the critical minerals potential of the New Dawn Lithium Project in Western Australia with all 17 holes from a reverse circulation (RC) drilling campaign intersecting vertically stacked pegmatites.
Read more
On your six
Australian Taxation Office takes action against its own officials involved in TikTok GST fraud scheme
The Australian Taxation Office (ATO) has launched investigations into at least 150 of its officials following a crackdown on a Goods and Services Tax (GST) fraud scheme which led to several employment terminations and criminal proceedings.
Read more
Poseidon Nickel identifies new targets at Windarra
Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) CEO Craig Jones sits down with Proactive’s Jonathan Jackson to discuss the identification of two new highly prospective nickel sulphide targets at WIndarra Project that bring the total to six so far.
Read more