After suffering its biggest 1-day fall in two months yesterday - closing 1.33% lower - the ASX200 is set to continue its losses this morning with the SPI Futures down 35 points, or 0.45%.
Overnight, US markets were mixed with the Dow Jones index falling 121 points or 0.3%. The S&P 500 index gained 0.3% and the Nasdaq index rose 151 points or 0.9%, both closing at fresh record highs.
Treasurer Jim Chalmers has said inflation will be brought back under control without “crunching the economy”, which is on track for a “soft landing”. This comes as economists say persistent price pressures will delay RBA rate cuts until next year.
ANZ head of Australian economics Adam Boyton said, “The economy has clearly slowed. It’s for this reason that we think a rate hike remains unlikely. However, getting an appropriate balance between the level of demand and supply is likely to take a little longer than expected.”
What happened overnight?
(Source Commsec):
US markets
US sharemarkets were mixed on Tuesday. The S&P 500 and Nasdaq indexes erased earlier losses after a solid US$39 billion US reading will help make the case for the US Federal Reserve to cut rates this year.
Investors appeared to be taking profits in artificial intelligence star Nvidia and rotating into emerging AI play Apple (NASDAQ:AAPL), which just unveiled new features that could spark a wave of iPhone upgrades. Apple hit a record high, finishing up 7.3%, while Nvidia dipped 0.7%.
General Motors (NYSE:GM) gained 1.4% after the automaker announced a US$6 billion share buyback plan. Banks remained under pressure, with giants JPMorgan Chase (NYSE:JPM) and Citigroup, down between 2.6% and 3.7%.
US bond market
US government bond yields declined on Tuesday after an auction of 10-year notes drew unusually strong demand. Investors also awaited key inflation data and a policy statement from the US Federal Reserve.
The US Treasury sold US$39 billion of 10-year notes at a yield of 4.438% into strong demand. The US 10-year Treasury yield fell 7 points to 4.40%. The US 2-year Treasury yield slid 5 points to 4.83%.
European markets
European sharemarkets closed lower on Tuesday, with banks across the continent falling 2.3% as investors fretted over political uncertainties in France.
The basic resources index lost 1.8% as metal prices came under pressure from a firmer US dollar and concerns over demand in China. Rio Tinto (ASX:RIO) shed 2% as the mining giant said it will buy Mitsubishi Corp's 11.65% stake in Boyne Smelters for an undisclosed sum.
The continent-wide FTSEurofirst 300 index dropped 0.9%, logging its biggest single-day drop in two weeks.
In London, the UK FTSE 100 index slid 1%, its worst day in nearly two months, with bank shares down 2.3%.
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0771 to US$1.0719 and was near US$1.0740 at the US close.
- The Aussie dollar rose from US65.88 cents to US66.13 cents and was near US66.05 cents at the US close.
- The Japanese yen firmed from 157.42 yen per US dollar to JPY156.80 and was near JPY157.10 at the US close.
Commodities
Global oil prices edged higher on Tuesday as the US Energy Information Administration (EIA) raised its 2024 world oil demand growth forecast to 1.1 million barrels per day (bpd) from a previous estimate for a rise of 900,000 bpd. OPEC, in a monthly report, said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024.
- The Brent crude price rose by US29 cents or 0.4% to US$81.92 a barrel.
- The US Nymex crude price gained US16 cents or 0.2% to US$77.90 a barrel.
Base metal prices dipped on Tuesday.
- Copper futures slid 0.7% to a seven-week low, pressured by rising inventories and weak indicators in China.
- Aluminium futures dropped 1.6%.
The gold futures price fell US40 cents or less than 0.1% to US$2,326.60 an ounce on Tuesday due to an uptick in the US dollar ahead of Wednesday's US inflation report. Spot gold was trading near US$2,316 an ounce at the US close.
Iron ore futures slid US$1.11 or 1% to a two-month low of US$106.27 a tonne on Tuesday, weighed down by weak fundamentals and concerns over demand prospects in China following the latest carbon emission plan for the steel sector.
What’s on?
In Australia, overseas arrivals and departures data is released. Superloop and Unibail-Rodamco-Westfield both host investor meetings. ALS shares trade ex-dividend. Chinese inflation data is scheduled.
In the US, the Consumer Price Index (CPI) is released. The Federal Reserve Open Market Committee (FOMC) hands down its interest rate decision.
On the small cap front
The S&P ASX Small Ordinaries ended 1.86% lower yesterday, while the ASX200 lost 1.33%.
You can read more about the following throughout the day.