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The ASX200 slipped another -0.5% on Wednesday, with the usual suspects dragging the index into the red. The banks followed their US peers lower to quash any chance of an intra-day recovery, although it was encouraging to see the market at least hold its ground for most of the session. The Resources Sector again dragged the main board as China’s weaker-than-expected inflation numbers fuelled concerns of weak demand:
Losers: Boss Energy (BOE) -5.2%, Mineral Resources (MIN) -3.6%, Sandfire Resources (SFR) -2%, RIO Tinto (RIO) -1.5%, Perpetual (PPT) -1.5%, Commonwealth Bank (CBA) -0.7%, and BHP Group (BHP) -0.6%.
Overnight, cooling US inflation sent bond yields lower and equities to fresh all-time highs. Excluding volatile food and energy prices, core CPI increased 0.2% on the month and 3.4% from a year ago, the slowest pace in more than three years—analysts were looking for 0.3% and 3.5%, respectively. The data was not a huge beat, but for a nervous market, it was Christmas!
- US inflation delivered a welcome surprise to Fed officials, with the year-on-year increase its slowest pace in three years.
- However, it wasn’t all good news for stocks, with Fed Officials dialling back their rate forecast to one cut in 2024 and four in 2025.
US stocks rallied overnight, led by the influential Tech Sector, which closed up +2.5%. However, the Dow surrendered early gains to edge lower, with Nike, Chevron, and Salesforce all falling over 2%. The S&P500 traded above 5400 for the first time following the CPI print, although it surrendered around 30% of its advance after the Feds’ “Dot Plot” showed a likely slower path for rate cuts through 2024/5, noting the plot would have been constructed pre the inflation read.
- This morning, the SPI Futures are calling the ASX200 to open up +0.6%, a solid move considering BHP Group (BHP) was down another 1% in the US.
MM is neutral towards the ASX
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First up this morning, we quickly reviewed three stocks MM has been monitoring over recent months that caught our attention for differing reasons on Wednesday.
