S&P 500 falls after higher-than-expected CPI data
Stocks wavered Tuesday and the Dow fell, reversing earlier gains, after the January consumer price index report showed that inflation grew at a higher-than-expected 6.4 per cent annual rate.
However, the CPI figure showed that it edged slightly lower from the 6.5 per cent figure shown in December. That marked the seventh straight month of easing inflation since peaking at 9.1 per cent in June.
The strong inflation report is likely to keep Federal Reserve officials on track to raise interest rates at their meeting in March and further slight increases will be likely after that.
Beyond the CPI, investors will also be watching earnings for insights into the health of the consumer.
Overall, the Dow Jones Industrial Average slipped 0.46 per cent. The S&P 500 slipped 0.03 per cent, reversing earlier losses. The Nasdaq Composite also recouped losses to trade 0.6 per cent higher, boosted by technology stocks including Tesla and Nvidia, which rose more than 7 per cent and 5 per cent, respectively.
The US is now seeking trade agreements with Japan and the UK to secure critical minerals and reduce dependence on China.
These deals are part of President Biden's efforts to shift global supply chains hedging against disruptions that would impact supply chains or create scarcities which may starve US or other friendly producers. The agreements may also provide incentives for the promotion of new electric vehicles.
In relation to EV’s, Ford is set to cut 3,800 product development and administration jobs in Europe in the next three years. The company attributed the layoffs to the transition to a “leaner” structure as it focuses on producing electric vehicles.
Ford states that the overhaul will not impact the company’s aim to offer an all-electric fleet by 2035 and expects production of its first European-built electric passenger vehicle to begin later this year.
Overnight, the S&P 500 sectors were choppy. Consumer discretionary was the best performer, whilst Real Estate was the biggest laggard. The auto sector and semiconductors performed well, while insurance, regional banks, and credit cards were weaker.
Global fund managers are increasingly worried about the sustainability of the rally in Chinese equities, with one in five considering it the market's most crowded trade.
Although global fund managers' allocations to emerging market equities, including China, have risen for three months in a row, there are concerns about the fast-growing popularity of Chinese stocks, indicating that momentum could fade.
Futures
The SPI futures are flat.
Currency
One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 69.87 US cents (Tue: 69.67 US cents).
Commodities
Iron ore futures are pointing to a 1.53 per cent gain. Iron ore is 1.6 per cent higher at US$123.75 tonne.
Gold gained 0.1 per cent. Silver rose 0.1 per cent. Copper gained 0.8 per cent and oil lost 1.2 per cent.
Figures around the globe
Across the Atlantic, European markets closed mixed. London’s FTSE added 0.1 per cent, Frankfurt fell 0.1 per cent while Paris closed 0.1 per cent higher.
In Asian markets, Tokyo’s Nikkei added 0.6 per cent, Hong Kong’s Hang Seng lost 0.2 per cent while China’s Shanghai Composite closed 0.3 per cent higher.
Yesterday, the Australian sharemarket closed 0.2 per cent higher at 7,431
Ex-dividends
Microequities (ASX:MAM) is paying 1.8 cents fully franked
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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