US sharemarkets ended Thursday in the red after comments from US Federal Reserve Chair Jerome Powell dampened investor expectations of an imminent rate cut. Aussie markets, meanwhile, are likely to head in the other direction, with ASX futures up 0.64% to 8,308 points this morning.
Powell in no hurry
Powell, perhaps looking to political headwinds as much as economic ones, said: “The economy is not sending any signals that we need to be in a hurry to lower rates.”
The Dow Jones accordingly dropped 207 points or 0.5%, while the S&P 500 and Nasdaq indexes each declined by 0.6%.
The electric vehicle (EV) sector faced additional pressure as Rivian Automotive (NASDAQ:RIVN) plunged 14.3% on news that President Joe Biden’s transition team may consider removing the US$7,500 tax credit for EV purchases, impacting stocks across the segment.
Tesla’s share price slipped by 5.8%. Meanwhile, Cisco Systems (NASDAQ:CSCO) declined 2.1% on the back of a conservative earnings forecast.
US government contractor stocks extended losses after Donald Trump named Elon Musk and Vivek Ramaswamy to the Department of Government Efficiency (DOGE) commission, a cost-cutting task force.
Leidos Holdings (NYSE:LDOS) also fell 13.6% on the Trump cabinet picks. Conversely, Walt Disney (NYSE:DIS) surged 6.2% following better-than-expected earnings.
Eurozone stronger
In Europe, sharemarkets closed higher, led by a strong performance in technology stocks, which climbed 3.1%, while the automotive and oil and gas sectors each added around 1.6%.
The FTSEurofirst 300 index rose by 1%, and the UK’s FTSE 100 gained 0.5%.
Eurozone GDP met expectations with a 0.4% increase in the third quarter, adding to the positive market sentiment. Retailer Burberry (LON:BRBY) surged 18.7% after unveiling a turnaround plan.
Economic data in the US showed initial jobless claims fell to 217,000 last week, slightly below estimates.
The Producer Price Index (PPI) rose 0.2% in October, with core PPI rising by 0.3%, suggesting inflationary pressures may persist.
In the bond market, US Treasury yields were mixed – the 10-year yield held near 4.46%, while the two-year yield rose by seven basis points to 4.36%, reflecting market speculation on future policy adjustments by the Fed.
The US dollar strengthened, with the euro rising to US$1.0520 and the Australian dollar easing to 64.50 US cents.
Currencies and commodities
In commodities, Brent crude oil edged up by 0.4% to US$72.56 per barrel after US gasoline stocks fell sharply, offsetting International Energy Agency projections of an oil surplus in 2024.
Gold slid to US$2,572.90 per ounce, pressured by the stronger dollar, while iron ore futures dropped to US$102.22 per tonne on a softer steel market outlook.
In Australia, key Reserve Bank insights will be shared in a panel discussion. Several major companies, including Helios and Sandfire Resources, are holding AGMs.
In China, significant economic data releases on retail sales, industrial production, and fixed asset investment are expected.
The US will release data on retail sales, industrial production, and import/export prices, offering further insights into the economic landscape.
Market snapshot
Australian dollar: -0.56% to 64.5 US cents
On Wall St: Dow -0.3%, S&P 500 -0.3%, Nasdaq -0.3%
Spot gold: -0.24% at $US2568/ounce
Brent crude: +0.29% at $US72.47/barrel
Bitcoin: -0.11% at $US88,853
Source: ABC