The ASX200 is expected to fall in early morning trading today. ASX Futures point to a 1.1% or 84-point drop and the deck appears fairly stacked against the bourse.
Yesterday’s inflation data continues to factor (4% vs a 3.8% forecast), placing the possibility of an interest rate hike in August firmly on the table.
Trimmed mean inflation was also higher, jumping from 4.1% to 4.4%, well above the RBA’s projection of 3.6% by the end of the June quarter – the market is currently predicting a 30% chance of a rate cut at present, but the reality remains to be seen.
US and European markets
(source: Commsec)
US sharemarkets rose overnight ahead of a US inflation report scheduled for later this week.
Amazon (NASDAQ:AMZN) gained 3.9% and pushed its market value beyond US$2 trillion while Nvidia seemed to recover its footing during its annual shareholder meeting, ending the day up 0.3% after a wave of profit-taking cut the chipmaking stock down to size.
Apple shares (NASDAQ:AAPL) also lifted 2% after Rosenblatt upgraded its guidance on the stock to ‘buy’ from ‘neutral’.
FedEx (NYSE:FDX) shares soared 15.5% after the company projected higher-than-expected 2025 profits while news that Robert Bosch, a German engineering group, is considering a bid for US appliance manufacturer Whirlpool (NYSE:WHR) boosted that stock by 17.1%.
On the other side of the ledger, General Mills (NYSE:GIS)' stock dropped 4.6% after forecasting annual profits below estimates and reporting a larger-than-expected decline in quarterly sales, and Automotive tech company Aptiv fell by 4.8% after JPMorgan Chase (NYSE:JPM) downgraded its rating to "underweight" from "neutral".
Overall, the Dow Jones index increased by 16 points or 0.04%, the S&P 500 index rose by 0.2% and the Nasdaq index added 87.5 points or 0.5%.
In Europe, rising bond yields across the Eurozone pushed markets lower. Inflation reports from Australia and Canada contributed to concerns that interest rates would remain high for a longer period.
Rate-sensitive real estate shares were among the biggest losers, falling by 1.1%, and auto stocks dropped by 1.3%. Volkswagen (ETR:VOWG_p) shares slipped 1.6% after the company announced plans to invest up to US$5 billion in a joint venture with electric vehicle maker Rivian.
The FTSEurofirst 300 index fell by 0.5%, while the UK FTSE 100 index ended 0.3% lower.
Currencies and commodities
Currencies weakened against the US dollar in European and US trade. The Euro declined from US$1.0704 to near US$1.0680 by the US close.
The Australian dollar dropped from US66.88, finishing close to US66.45 cents. The Japanese yen slipped from 159.79 yen, ending near JPY160.80.
Global oil prices slightly increased on Wednesday, despite an unexpected rise in US gasoline supplies, as investors were concerned about potential crude supply disruptions from the Middle East due to the Gaza conflict.
The US Energy Information Administration (EIA) reported a surprising 3.6-million-barrel increase in the country's crude oil stocks last week, contrary to analyst expectations of a drawdown.
Brent crude prices rose by US24 cents or 0.3% to US$85.25 a barrel. US Nymex crude prices increased by US7 cents or 0.1% to US$80.90 a barrel.
Base metal prices were mixed.
Copper futures fell by 0.3% due to the stronger US dollar and concerns about Chinese demand. Aluminium futures rose by 0.5%.
Gold futures prices fell by US$17.60 or 0.8% to US$2,313.20 an ounce, pressured by a stronger US dollar and higher US bond yields. Spot gold was trading near US$2,298 an ounce at the US close.
Iron ore futures increased by US10 cents or 0.1% to US$106.56 a tonne on Wednesday. The price lift was supported by buying activity in China's spot market and speculation that China, the world's second-largest economy, might introduce more stimulus measures to boost its struggling property market.
On the small cap front
The ASX Small Ordinaries fell 30.1 points or 1% yesterday, mirroring the ASX200’s 8.8% fall.
You can read about the following and more throughout the day on the Proactive website.