The ASX looks set to open lower this morning with the benchmark ASX 200 index set to continue yesterday’s losses — ASX 200 futures are down 0.3%.
This follows comments overnight from US Federal Reserve chairman Jerome Powell suggesting that inflation hasn’t been reduced enough, lifting speculation that interest rates won’t be cut as soon as has been expected.
“More recent data shows solid growth and continued strength in the labor market but also a lack of further progress so far this year on returning to our 2% inflation goal,” he said.
Citi lifts gold price forecast
Citi has upgraded its year-average gold price forecasts to its "bull-case scenario". For 2024, it sees a 6.8% rise to $2,350 per ounce and for 2025, it has provided a massive 40% upward revision to $2,875 per ounce.
Citi commodity strategists led by Aakah Doshi said, "While prospects of a May/June bullion price pullback have increased, in our view, we expect strong buying support at $2,200 per ounce.
"Financial gold demand seems to be playing catch-up with robust physical. Even as the implied “duration” of gold has shortened since June 2021, an eventual Fed cutting cycle and Treasury rally could be the bullish kicker to $3,000 per ounce."
Gold futures have risen to near $US2401.90 an ounce.
What happened overnight?
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US markets
US sharemarkets were mixed in choppy trading on Tuesday as rising US Treasury yields and elevated geopolitical worries counteracted a generally positive string of first-quarter corporate results.
- The Dow Jones index rose by 64 points or 0.2%;
- the S&P 500 index dipped 0.2%; and
- the Nasdaq index shed 20 points or 0.1%.
US Federal Reserve chair Jerome Powell said recent inflation data had not given policymakers enough confidence to ease interest rates soon, noting that the US central bank may need to keep rates higher for longer than previously thought.
UnitedHealth (NYSE:UNH) rallied 5.2% after posting better-than-expected quarterly results. Morgan Stanley (NYSE:MS) added 2.5% after its first-quarter profit beat estimates on resurging income from investment banking.
But Bank of America (NYSE:BAC) slid 3.5% after the lender posted lower first-quarter profits as its loan loss provisions grew. Johnson & Johnson slipped 2.1% as the drugmaker's revenue missed analysts' estimates.
European markets
European sharemarkets fell on Tuesday as investors followed developments in the Middle East.
- The continent-wide FTSEurofirst 300 index fell by 1.5%.
- In London, the UK FTSE 100 index slipped 1.8%.
Basic resources stocks slid 3%, the biggest one-day decline since mid-August, as copper prices fell on soft China factory data. Banks lost 2.5%, their biggest one-day drop since August, dragged by 3% declines in Britain's HSBC and euro zone's largest bank BNP Paribas (EPA:BNPP).
European Central Bank (ECB) president Christine Lagarde said the central bank remained on course to cut interest rates in the near-term.
Currencies
Currencies were weaker against the US dollar in European and US trade.
- The Euro fell from US$1.0653 to US$1.0600 and was near US$1.0615 at the US close.
- The Aussie dollar slid from US64.25 cents to US63.90 cents and was near US64.00 cents at the US close.
- The Japanese yen eased from 154.28 yen per US dollar to JPY154.77 and was near JPY154.70 at the US close.
Commodities
Global oil prices fell slightly on Tuesday after economic headwinds offset support provided by the US announcement of plans to hit Iran with new sanctions after the Middle Eastern country's weekend attack on Israel.
- The Brent crude price fell by US8 cents or 0.1% to US$90.02 a barrel.
- The US Nymex crude price shed US5 cents or 0.1% to US$85.36 a barrel.
Base metal prices retreated on Tuesday.
- Copper futures fell 1.7% after factory data weakened in China.
- Aluminium futures slipped 0.2%.
The gold futures price rose by US$24.80 or 1% to US$2,407.80 an ounce on Tuesday on safe-haven demand. Spot gold was trading near US$2,385 an ounce at the US close.
Iron ore futures edged up US2 cents or less than 0.1% to US$106.07 a tonne on Tuesday after Chinese data underlined how the nation's steel builders remain in the doldrums.
What’s on?
In Australia, the leading index is released.
Bank of Queensland releases earnings. Rio Tinto (ASX:RIO) and Evolution Mining provide production updates. Novonix (ASX:NVX) hosts an AGM. Boral and Washington H Soul Pattinson trade ex-dividend.
On the small cap front
The S&P ASX Small Ordinaries lost 2.42% yesterday, while the ASX 200 fell 1.81%.
You can read more about the following throughout the day.