ASX and US Market Overview
ASX futures were up 4 points or 0.05% as of 8:00am on Wednesday, suggesting a gain at the open.
US shares ended mixed Tuesday after data showed that inflation cooled but remained hot enough to keep the Federal Reserve on track for further interest rate increases.
The Dow Jones Industrial Average lost 0.5% while the S&P 500 closed less than 0.1% in the red. The tech-heavy Nasdaq Composite gained 0.6%.
The US consumer-price index showed annual inflation cooled for the seventh straight month to 6.4% last month, according to Labor Department data released Tuesday. Still, the reading came in slightly above what economists surveyed by The Wall Street Journal had expected. Inflation also increased in January from a month earlier, in large part due to rising costs for shelter.
The data make it likely the Fed will not only raise interest rates in March, as was widely anticipated, but also point to the need for further rate increases in the following months. Hopes that the Fed would be able to pause after their March meeting had helped stocks rally to start the year.
Commodities and Bonds
In commodity markets, Brent crude oil slipped 1.10% to $US85.66 a barrel while gold edged 0.03% higher to US$1,853.98.
Australian government bonds dipped lower, with the 2 Year yield down slightly at 3.43% and the 10 Year yield declining to 3.73%. Meanwhile, US Treasury notes gained with the 2 Year yield jumping to 4.62% and the 10 Year yield reaching 3.76%.
The Australian dollar increased to 69.82 US cents from its previous close of 69.65. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged up to 96.21.
Asia
Chinese stocks ended mixed, retreating from Monday's gains, amid continued range-bound trading. The benchmark Shanghai Composite Index was the only gainer, adding 0.3% to settle at 3293.28. The Shenzhen Composite Index shed 0.1% to 2188.81, while the tech-heavy ChiNext Price Index was down 0.3% at 2565.15. Consumer goods and services companies led losses, as the sector continued to pull back from its January rally driven by China's reopening. Solid gains in energy-storage and electricity equipment stocks offset the weakness to some extent. Investors looked forward to expected policy support for energy-storage projects amid Beijing's carbon neutrality push.
Hong Kong's benchmark Hang Seng Index ended 0.2% lower at 21113.76, reversing its early gains as investors awaited US inflation data. Technology stocks weighed in today's session with JD.com falling 1.8% and Tencent Holdings declining 2.1%. Shares of Wuxi Biologics (Cayman) closed 4.0% lower after the company's earnings guidance came up short of analyst expectations. Property stocks gained on hopes of recovery fueled by policy support from Beijing. Longfor rose 0.6% and KE Holdings closed 5.1% higher.
Japan's Nikkei Stock Average rose 0.6% to close at 27602.77, led by food, electronics and video game shares. Sentiment appeared to be mostly following the positive handover from Wall Street overnight, Yeap Jun Rong, market analyst at IG, said in an email. Suntory Beverage & Food climbed 6.4% after its net profit rose 20% in 2022, while Nissin Foods climbed 3.2% and Asahi Group added 3.0%. Renesas Electronics gained 5.0%, while Capcom advanced 3.9% and Nintendo was up 2.1%.
India's benchmark Sensex index closed 1.0% higher at 61032.26 amid gains in financial stocks. Traders were awaiting the release of US CPI data, which will influence rate increase decisions, ICICI Direct Research analysts said in a note. Among finance shares, Bajaj Finance added 1.8%, ICICI Bank was 1.8% higher and Axis Bank rose 1.3%. Adani Enterprises also closed 1.9% higher after it reported Q3 results. Group Chairman Gautam Adani said in a release that the group will work with the twin objectives of reducing leverage and looking for growth opportunities, adding that the current market volatility is "temporary."
Europe
European stocks mostly rose ahead of the release of US inflation data. The pan-European Stoxx Europe 600 gained 0.2% and the French CAC 40 added 0.1%, while the German DAX edged 0.1% lower. The United Kingdom’s FTSE 100 closed 0.1% higher after Liberty Global said it had bought a 4.92% stake in Vodafone.
"The FTSE 100 has continued to make new record highs today coming to within touching distance of the 8,000 level, before slipping back after US CPI data came in slightly hotter than expected," CMC Markets UK's Chief Market Analyst Michael Hewson said in a note.
Coca-Cola HBC shares also rose to three-month highs after full-year results came in better than expected, Hewson said. Coca-Cola HBC led the FTSE 100's gainers, ending up 5.0%, followed by Vodafone, which ended 3.4% higher. United Utilities was the biggest faller, ending down 2.1%.
North America
US shares ended mixed Tuesday after data showed that inflation cooled but remained hot enough to keep the Federal Reserve on track for further interest rate increases.
The Dow Jones Industrial Average lost 0.5% while the S&P 500 closed less than 0.1% in the red. The tech-heavy Nasdaq Composite gained 0.6%.
The US consumer-price index showed annual inflation cooled for the seventh straight month to 6.4% last month, according to Labor Department data released Tuesday. Still, the reading came in slightly above what economists surveyed by The Wall Street Journal had expected. Inflation also increased in January from a month earlier, in large part due to rising costs for shelter.
The data make it likely the Fed will not only raise interest rates in March, as was widely anticipated, but also point to the need for further rate increases in the following months. Hopes that the Fed would be able to pause after their March meeting had helped stocks rally to start the year.
"The strength of core inflation suggests that the Fed has a lot more work to do to bring inflation back to 2%," said Maria Vassalou, co-chief investment officer of multi-asset solutions at Goldman Sachs Asset Management, in emailed comments. Ms. Vassalou added that she would be watching Wednesday's retail sales report to see if the economy remains hot enough to require the Fed to bring rates even higher than they currently anticipate.
Some economists say data can be volatile from month to month, and that it's normal to see some moderation in the pace of inflation cooling.
"Everyone's expecting ups and downs in the disinflationary trend," said Samy Chaar, chief economist at Lombard Odier. "We know that we're not going to see massive disinflation month after month."
Corporate Earnings
Corporate earnings for the fourth quarter drove swings across the stock market.
Coca-Cola reported a stronger-than-expected 7% rise in quarterly revenue, but said it expected sales growth to slow over the rest of the year. The beverage maker's shares fell 1.3%.
Marriott International stock rose 2.6% after the hotel operator's fourth-quarter results topped Wall Street's expectations. Demand for leisure travel in the US and Canada held strong in the fourth quarter, with travelers paying more for rooms despite being charged higher rates, the company said.
