The ASX is expected to fall today. ASX 200 futures are trading 44 points lower, down -0.60% as of 8:20am AEST.
Today’s downward movement comes after the Dow Jones snapped its thirteen-session winning streak, with treasury yields surging (11-17bp) on the back of robust economic data, a poorly received 7-year auction and reports that the Bank of Japan will tweak its YCC (yield curve control) policy at this afternoon's meeting.
US economic data showed the economy (GDP) grew at a 2.4% annual pace in the June quarter, while initial jobless claims fell by 7,000 to 221,000 last week. Durable goods orders rose by 4.7% in June. Pending home sales lifted 0.3% in June and wholesale inventories fell by 0.3% in June. The goods trade deficit fell by US$4.1 billion to US$87.8 billion in June.
IG Markets analyst Tony Sycamore said: “The stronger data comes just a day after the Fed raised rates and raised hopes that it was at the end of its rate hiking cycle. However, the rise in yields indicates that this thinking might be premature.”
The European Central Bank (ECB) also hiked another 25 bps in-line with expectations, while keeping its options open for September.
What happened overnight?
Here’s what we saw (source Commsec)
US markets
Fell on Thursday as strong US economic data fuelled concerns that the US central bank isn't done with its fight with inflation. US government bond yields rose sharply. Shares of online retailer eBay (NASDAQ:EBAY) sank 10.5% after third-quarter earnings guidance came in below expectations. Food chain Chipotle Mexican Grills shares shed 9.8% after the company’s quarterly revenue disappointed. Industrial giant Honeywell (NYSE:NASDAQ:HON) International (- 5.7%) reported a mixed second quarter. McDonald's (NYSE:MCD) shares gained 1.2% after the restaurant chain topped estimates for the second quarter. Meta Platforms shares jumped 4.4% after it reported a jump in second-quarter advertising revenue.
The Dow Jones index fell by 237 points or 0.7%, snapping its longest winning streak since 1987. The S&P 500 index dipped 0.6% and the Nasdaq index shed by 77 points or 0.6%.
European markets
Closed higher on Thursday, touching 17- month highs, as investors anticipated the ECB was close to the end of its tightening cycle. Technology shares rose by 4.4% with Aixtron shares up 13.2% as the chip systems manufacturer raised its annual outlook.
The continent-wide FTSEurofirst 300 index rose by 1.4%. And the UK FTSE 100 index gained 0.2%, boosted by a 3.9% lift in media shares.
Currencies
Were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.1149 to US$1.0964 and was near US$1.0975 at the US close.
- The Aussie dollar slid from US68.17 cents to US66.97 cents and was near US67.05 cents at the US close.
- The Japanese yen firmed from 141.28 yen per US dollar to JPY138.78 and was near JPY139.55 at the US close.
- The Brent crude price rose by US$1.32 or 1.6% to US$84.24 a barrel.
- The US Nymex crude price added US$1.31 or 1.7% to US$80.09 a barrel.
- Base metal prices fell on Thursday as concerns persisted about lacklustre Chinese demand.
- The copper futures price slid 0.7% and the aluminium futures price shed 0.2%.
- The gold futures price fell by US$24.40 or 1.2% to US$1,945.70 an ounce.
- Spot gold was trading near US$1,944 an ounce at the US close.
- Iron ore futures added US1 cent or less than 0.1% to US$112.90 a tonne.
It was a good day for small caps on the local market yesterday as the S&P/ASX Small Ordinaries climbed 1.46% higher to 2,922.00.