Australian shares are expected to be weaker today, tracking a downturn overnight in the US. The Dow Jones index closed down by 138 points or 0.4%, the S&P 500 by 0.3%, and the Nasdaq by 49 points or 0.3%.
The dampener was the unexpected surge in February's Producer Price Index (PPI), which raised inflation worries and cast doubt on the probability of the Federal Reserve cutting interest rates in June.
The PPI rose by 0.6% in February, exceeding expectations, with annual growth accelerating to 1.6%.
Core PPI also increased, albeit marginally. Retail sales showed resilience with a 0.6% rise, though slightly below forecasts.
Initial jobless claims dipped to 209,000, and business inventories remained unchanged, both signalling economic stability.
Yields on US government bonds climbed as producer prices indicated stronger inflationary pressures, complicating the Federal Reserve's rate cut timeline. The US 10-year Treasury yield increased to 4.29%, and the two-year yield to 4.69%.
Tech sector losses
There were some significant losses in the technology sector, with shares in AI leader Nvidia slumping by 3.2%.
Other major chipmakers, including Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD), saw their shares fall by 1.1% to 4%, contributing to a 1.8% decrease in the Philadelphia SE Semiconductor index.
Tesla (NASDAQ:TSLA)'s shares also dropped by 4.1% after UBS revised down its price target and first-quarter delivery forecast.
The homebuilder Lennar (NYSE:LEN) reported a revenue shortfall, leading to a 7.6% fall in its shares, while Verizon Communications (NYSE:VZ) experienced a 1.2% decrease, impacting the Dow Jones index.
Conversely, gains in Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), ranging from 1.1% to 2.4%, mitigated broader market losses.
European markets lost momentum after achieving record highs in recent sessions.
The mining sector led the declines, dropping by 1.5% as metal prices weakened.
Swedish gaming company Embracer announced it would divest selected assets from its subsidiary Saber Interactive for US$247 million and exit operations in Russia, resulting in an 11.2% drop in its shares.
The continent-wide FTSEurofirst 300 index fell by 0.2%, and the UK's FTSE 100 index decreased by 0.4%.
Currencies and commodities
In currency markets, the Euro, Australian dollar, and Japanese yen weakened against the US dollar amid prevailing economic uncertainty.
Global oil prices, however, reached four-month highs as the International Energy Agency (IEA) adjusted its demand growth forecast upwards, signalling a tighter market in 2024.
Brent crude moved up to US$85.42 a barrel, and US Nymex crude to US$81.26 a barrel.
Base metal prices fell, with copper futures dropping by 0.4% amid ongoing concerns over demand and production cuts in China.
Gold futures dropped by US$13.30 or 0.6% to US$2,167.50 an ounce on Thursday after the PPI surprise cooled rate cut expectations.
Spot gold was trading near US$2,163 an ounce at the US close.
Iron ore futures slid 83 US cents or 0.7% to six-month lows near US$110.94 a tonne on Thursday, under pressure from a combination of fundamental and sentiment factors in dominant importer China that are likely to persist over the short-term.
Market snapshot
- ASX 200 futures: -0.7% to 7,665 points
- Australian dollar: -0.5% to 65.82 US cents
- S&P 500: -0.3% to 5,150 points
- Nasdaq: -0.3% to 16,129 points
- FTSE: -0.4% to 7,743 points
- EuroStoxx: -0.2% to 506 points
- Spot gold: -0.3% to $US2,163/ounce
- Brent crude: +1.3% to $US85.19/barrel
- Iron ore: -2.8% to $US102.55/tonne
- Bitcoin: -4% to $US70,288
Source: ABC