Note: Figures recorded at 7:40am AEDT. Updated figures and a video recording will be available at 9am AEDT.
Stocks fell Wednesday as Treasury yields tracked higher following the release of stronger-than-expected U.S. economic data.
Retail sales data for December came in stronger-than-expected, indicating a resilient consumer and putting aggressive rate cuts from the Federal Reserve into doubt. Retail sales were up 0.6% from November, and gained 0.4% month-over-month excluding autos. Economists polled by Dow Jones had estimated a 0.4% month-to-month increase in retail sales and 0.2% ex-autos.
The 10-year Treasury yield was last trading 4 basis points higher at 4.11%, continuing its rise from Tuesday after Federal Reserve Governor Christopher Waller warned easing monetary policy may come slower than anticipated.
So far, traders are pricing in a roughly 52% chance that the Federal Reserve begins cutting rates in March as hopes mount for a pivot, according to CME Group’s FedWatch tool.
The Dow Jones Industrial Average declined 191 points, or 0.5%. The S&P 500 and Nasdaq Composite lost 0.9% and 01%, respectively.
Charles Schwab shed 1.9% after reporting mixed quarterly results. Walgreens and Caterpillar both lost more than 4%, leading the Dow’s losses. Meanwhile, Boeing gained about 1%, making it one of the biggest gainers in the Dow after weeks of heavy losses.
In commodity-related news, iron ore, oil, and gold, declined, with gold nearing a drop below $2,000 per ounce.
In the UK, both headline CPI at 4% and core CPI at 5.1% slightly exceeded expectations, delaying a potential Bank of England pivot towards rate cuts.
The UK 10-year note yield surged by 19 basis points to 3.98%, and this disappointing CPI report indicates that the Bank of England is still distant from having sufficient evidence to confidently lower rates.
Additionally, China's recent data and weak consumer confidence are impacting overall market sentiment and retail sales figures are expected to remain volatile.
Looking ahead to the Australian market, shares are likely to fall due to inflation data in the UK and strong US retail sales, reinforcing the argument that rate cuts may be imminent. Additionally, on Thursday, Ampol, BHP, and Yancoal are scheduled to release their production updates.
Currency
One Australian dollar at 7.30am was buying 65.43 US cents.
Figures around the globe
European markets closed lower. London’s FTSE fell 1.48 per cent, Frankfurt lost 0.84 per cent, and Paris closed 1.07 per cent lower.
Turning to Asian markets, Tokyo’s Nikkei lost 0.40 per cent, Hong Kong’s Hang Seng dropped 3.71 per cent and China’s Shanghai Composite closed 2.09 per cent lower.
The Australian share market closed 0.29 per cent lower at 7,393.08.
Ex-dividends
Plato Inc Max (ASX:PL8) is paying 0.55 cents fully franked
Spheria Emerging Co (ASX:SEC) is paying 2.9 cents fully franked
Dividends payable
Garda Property Group (ASX:GDF)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
