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The morning catch up: ASX to slip following mixed day on Wall Street, European inflation up again

Published 05/01/2024, 09:53 am
Updated 05/01/2024, 10:00 am
© Reuters.  The morning catch up: ASX to slip following mixed day on Wall Street, European inflation up again

Australian shares are expected to rise following a mixed performance on Wall Street, which saw modest gains and losses in a cautious trading environment ahead of the crucial December US jobs report.

ASX futures indicate an uptick in the vicinity of 0.2% to 7,491 points.

In the US, the Dow Jones managed to hold onto modest gains, moving up 0.03% to 37,440 points, while the S&P 500 slipped into negative territory, down 0.3% to 4,688 points.

Apple (NASDAQ:AAPL) still hurting Nasdaq

The technology sector, mauled by Apple’s continued decline, put downward pressure on the Nasdaq.

It sank by 0.6% to 14,510 points — recording its third-straight loss for the year.

Bitcoin showed resilience, regaining momentum and trading above US$44,000.

The Australian dollar experienced a brief dip below 67 US cents, influenced by rising US yields. The yield on the US 10-year note surged to 3.99%, reflecting a robust labour market.

In Asia, Chinese markets closed lower, with key indices such as the Shanghai Composite and Shenzhen Composite falling.

Losses in sectors like liquor and semiconductors were prominent, while energy stocks had a good run.

Hong Kong's market remained flat, balancing gains in energy and tech with losses in consumer products and real estate.

Japan’s Nikkei Stock Average dropped, influenced by Wall Street's overnight losses and uncertainty regarding the US Federal Reserve’s rate-cut timeline.

There was a more optimistic outlook on European markets, with major indices like the Stoxx Europe 600, CAC 40, and DAX posting gains.

The FTSE 100 index also closed higher, buoyed by oil-exposed stocks and an upbeat performance from retailer Next PLC (LSE:NXT).

European inflation

Inflation figures from Europe indicate an increase in consumer prices in both Germany and France, aligning with economists' forecasts. In France, December saw a rise in annual inflation to 4.1%, a slight increase from November's 3.9%.

This surge is attributed primarily to elevated energy and services prices, with the former escalating to 5.6% and the latter to 3.1%. Analysts anticipate a continued upward trend in energy costs, and there is concern about the inflation in services, considering its significant share in the consumer price index.

Food price growth in France dropped to 7.1% year-on-year in December from November's 7.7%.

Inflation in Germany rose to 3.8% in December, interrupting its recent downward trajectory, which might influence the European Central Bank's (ECB) decision to maintain current interest rates.

This renewed inflationary pressure could encourage the ECB to adopt a cautious approach, avoiding hasty rate cut decisions.

The upcoming Euro zone inflation data, expected to rise to 3% in December from November's 2.4%, will provide further insights into the region's economic landscape.

Commodity prices showed varied trends, with gold edging up, while oil and iron ore experienced declines.

Brent crude fell to US$77.61 per barrel, after a massive US inventory pushed prices lower, and iron ore prices dropped by 1.2% to US$140.95 per tonne.

Investors globally are poised for the release of the December US jobs report, which could provide further insights into the health of the world’s largest economy and influence future market movements.

Market snapshot

  • ASX SPI 200 futures: +0.2% to 7,491 points
  • Australian dollar: 67.05 US cents
  • On Wall St: Dow +0.2%, S&P 500 -0.1%, Nasdaq -0.3%
  • In Europe: Stoxx50 +0.6%, FTSE +0.5%, DAX +0.5%
  • Spot gold: +0.2% at $US2,043.87/ounce
  • Brent crude: -0.8% at $US77.61/barrel
  • Iron ore: -1.2% at $US140.95/tonne
  • Bitcoin: +3.3% at $US44,356
  • US 10-year bond: +8bp at 3.99%.

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