ASX set for weaker start ahead of inflation data; Wall Street’s S&P 500, Dow dip

By Chuck Mikolajczak

The Australian sharemarket is set for a weaker open ahead of the release of the latest inflation figures this morning. US stocks fluctuated overnight as investors assess the timing and size of the Federal Reserve’s interest rate cuts in 2024 before US inflation data later this week.

On Wall Street, the S&P 500 and Dow Industrials slipped, pressured by a modest rise in Treasury yields. Expectations the US central bank could begin cutting rates as soon as March have been slowly decreasing, with CME’s FedWatch Tool showing a 63.8 per cent chance for a cut of at least 25 basis points (bps) for the month, down from 79 per cent a week ago.

“It’s all speculation on what the Fed may or may not do, and the bond market clearly got ahead of itself in anticipating rate cuts starting in March,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “The market is just jumping one way or the other trying to get ahead of things if they occur.”

Investors are trying to assess the next interest rate moves.
Investors are trying to assess the next interest rate moves.Credit: Reuters

ASX futures were down 12 points, or 0.2 per cent, at 7481 as of 7:59am AEDT. In New York overnight, the Dow Jones Industrial Average fell 0.4 per cent to 37,525.16 points; the S&P 500 lost 0.2 per cent while the Nasdaq Composite added 0.1 per cent.

Australia’s Consumer Price Index (CPI) indicator for the year through November is set for release at 11:30am AEDT, with hopes price pressures have eased further after slowing to 4.9 per cent through October.

Stocks had rallied in the previous session, with the Nasdaq and S&P 500 scoring their first daily percentage climbs of more than 1 per cent since Dec. 21 and biggest one-day percentage advances since November 14. In the local market, the S&P/ASX200 rallied 0.9 per cent to 7520.5 on Tuesday, with 10 out of 11 sectors trading higher.

Atlanta Fed President Raphael Bostic on Monday stressed the need to keep monetary policy tight, while Fed Governor Michelle Bowman retreated from her persistently hawkish view and signalled a willingness to support eventual rate cuts as inflation eases.

Boeing weakened for a second straight session, down 1.3 per cent, as the US National Transportation Safety Board continued its probe into the plane maker following a blown-out panel on an Alaska Airlines flight over the weekend.

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Juniper Networks surged 22.2 per cent after a source told Reuters that Hewlett Packard Enterprise was in talks to buy the networking product maker in a $US13-billion deal. The server maker dropped 7.3 per cent.

Reuters, with staff

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