US stocks fall following new CPI data

Stocks fell Thursday, pressured by rising Treasury yields, as traders fretted over new data showing persistent US inflation.

The consumer price index released Thursday increased 0.4 per cent on the month and 3.7 per cent from a year ago, according to a Labor Department report. Dow Jones estimates were 0.3 per cent and 3.6 per cent, respectively. The core inflation number, excluding food and energy prices, came out in line with economists’ expectations at an increase of 0.3 per cent on the month and 4.1 per cent on a 12-month basis. The data comes following a stronger-than-expected producer price index for September.

Treasury yields rose on the back of fresh inflation data Thursday. The benchmark 10-year rate moved nearly 11 basis points higher to 4.707 per cent. The 2-year Treasury yield was trading at 5.06 per cent after rising by more than 6 basis points.

Yields recently hit a 16-year high, rattling stocks. Earlier this month, the 10-year Treasury yield traded above 4.8 per cent.

Some investors believe higher yields are here to stay, influencing Thursday’s downturn in the equity market.

The Dow Jones Industrial Average lost 194 points, or 0.5%, while the S&P 500 was down by roughly 0.6%. The Nasdaq Composite declined about 0.6%. The indexes are on track to snap their four-day winning streak.

Shares of Walgreens gained 6 per cent after reporting narrower losses and progress in its cost-cutting plans. Still, the pharmaceutical company offered soft profit guidance and an earnings miss. Several companies, including JPMorgan, BlackRock and UnitedHealth Group, are slated to report earnings on Friday.

The ongoing Israel-Hamas war has raised questions of a potential oil supply crunch and a resulting rise in fuel prices if the geopolitical instability spreads to neighbouring oil producers in the region. Brent crude oil gained 0.6 per cent to more than $86 a barrel.

The price of gas also rose on the news. The price of futures contracts for Dutch gas, the European benchmark, rose as much as 14.2 per cent to €53 per megawatt hour, taking its gains to more than 30 per cent since Hamas’s attack on Israel last weekend. The moves are the latest jolt for a market that has been volatile since Russia’s invasion of Ukraine last year.

In further commodity news, China has criticised the EU's plan to investigate its steelmakers for subsidies, stating that it disrupts global supply chains and goes against international trade norms. This is part of an agreement with the US, where the EU investigates steel producers in exchange for the US not imposing tariffs on EU steel and aluminium.

Turning to US sectors, all closed lower except for Tech and Energy. Materials was the worst performer.

Futures

The SPI futures are pointing to a 0.8 per cent fall.

Currency

One Australian dollar at 7:30 AM was buying 63.14 US cents.

Commodities

Gold lost 0.31 per cent. Silver fell 0.80 per cent. Copper lost 0.79 per cent. Oil added 0.07 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE added 0.32 per cent, Frankfurt fell 0.23 per cent, and Paris closed 0.37 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei gained 1.75 per cent, Hong Kong’s Hang Seng added 1.93 per cent while China’s Shanghai Composite closed 0.94 per cent higher.

The Australian share market closed 0.04 per cent higher at 7,090.98.

Ex-dividends

Harvey Norman (ASX:HVN) is paying 12 cents fully franked
United Overseas Aust (ASX:UOS) is paying 2 cents unfranked

Dividends payable

BSP Financial Group Ltd (ASX:BFL)
Cash Converters International Ltd (ASX:CCV)
Coventry Group Ltd (ASX:CYG)
Embelton Ltd (ASX:EMB)
Fonterra Shareholders Fund FSF)
HUB24 Ltd (ASX:HUB)
Imperial Pacific Ltd (ASX:IPC)
London City Equities Ltd (ASX:LCE)
Seven Group Holdings Ltd (ASX:SVW)
XRF Scientific Ltd (ASX:XRF)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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