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FIVE at FIVE AU: Australian market down as analysts ponder Fed's next move

Published 17/06/2024, 04:05 pm
© Reuters.  FIVE at FIVE AU: Australian market down as analysts ponder Fed's next move
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The Australian share market is lower today, dropping 23.60 points or 0.31% to 7,700.70.

Arcadium Lithium Plc and Paladin Energy (ASX:PDN) Ltd fared the worst, down 5.61% and 5.41% respectively.

The index has lost 2.03% for the last five days but sits 2.65% below its 52-week high.

Of the sectors, Communications Services, up 0.77%, and Financials, up 0.28%, were up the most, while Information Technology and Energy dragged the day’s proceedings, down 1.47% and 1.43%.

Inflation expectations increase

Of the ongoing tech rally on the US markets and what's next for inflation there, IG analyst Tony Sycamore had this to say:

“On Friday, the Nasdaq, driven by the tech frenzy, marked its fifth consecutive session of record closing highs.

“In contrast, the S&P500 and the Dow Jones closed marginally lower, weighed on by a soft Michigan Consumer Sentiment reading for June.

“For the week, the Nasdaq gained 3.47%, the S&P500 gained 1.58%, and the Dow Jones lost 209 points (-0.54%). The divergence evident in the weekly numbers tells a clear story of where longs and shorts are best expressed in US equity markets currently.

“The preliminary University of Michigan Consumer sentiment index fell for a third straight month to 65.6 (vs 72 exp), the lowest since November.

“The current conditions and expectations subindices both fell while five-year inflation expectations increased to 3.1% from 3%.

“With the Fed now out of the blackout period, Fed Members Mester and Goolsbee noted that last week's cooler inflation data was welcome news.

“However, they would still like to see a few more months of cooler inflation data before cutting rates I would expect to hear similar thoughts echoed by other Fed Speakers this week.

“The rates market starts this week pricing in a 68% chance of a 25bp Fed rate cut in September and a full 50bp of rate cuts before year-end.”

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