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Tony barber

6,360 Posts.

681

06/02/24

09:14

Post #: 72254809
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Originally posted by highlandlad ↑

Morning traders. Thanks loungers, especially @Ravgnome.

Outlook for the day: Negative for a second day after US Federal Reserve resistance to rate cuts boosts treasury yields, sending stocks lower. The RBA announces its first interest rate decision of the year this afternoon.

ASX futures: down 33 points or 0.43%

Overnight themes:

US stocks sink after Fed Chair Jerome Powell pushes back against market expectations that rate cuts are imminent. The Dow leads a sell-off as a treasury yields surge higher. The S&P 500 backs off Friday's record close.

Powell tells '60 Minutes' the Fed can afford to "give it some time" before lowering official rates. The bank wants to ensure the current decline in inflation is sustainable. "We want to approach that question carefully," he says. "We have to balance the risk of moving too soon...or too late," he adds.

Separately, Minneapolis Fed president Neel Kashkari says the strength of the economy means the bank can take its time before lowering rates. Kashkari's comments in an essay published overnight follow unexpectedly hot January employment data on Friday that showed the US economy created almost twice as many jobs last month as economists anticipated.

The yield on 10-year US treasuries spikes 14 basis points to above 4.16%. Last week, the 10-year yield dropped as low as 3.81%.

"There's more realization the Fed is not going to start cutting in March. Powell was very adamant about that. You saw some of the other Fed governors out today reiterating they just need more data in the wake of how hot the job numbers were on Friday" - Carol Schleif, chief investment officer at BMO family office (per Reuters).

The materials sector is the biggest drag, falling 2.52%. The real estate, utilities and consumer discretionary sectors decline more than 1.3%. Tech and health resist the downtrend, gaining 0.58% and 0.31%, respectively.

The Australian dollar falls under 65 US cents for the first time this year as US rate-cut worries lift the greenback. The Aussie trades as low as 64.69 US cents, a level last seen in mid-November.

A rising greenback and on-going worries about Chinese demand weigh on industrial metals. Copper falls to its lowest in almost two weeks on the London Metal Exchange. Nickel closes beneath US$16,000 a ton.

Iron ore edges off a two-week low in Chinese trade after the national regulator says it will step up measures to stabilise the market. Prices have fallen ahead of a week-long national holiday and as ore inventories at Chinese ports increased by 1.32% last week.

The Reserve Bank met yesterday for a two-day meeting that climaxes with the announcement of the new cash rate target at 2.30 pm AEDT. While no change is expected, a newly-introduced press conference at 3.30 pm will allow the central bank to expand on its intentions for the year ahead. The timing of the conference presents the risk of a late burst of stock market volatility.

Key events today:

Cash rate announcement and statement - 2.30 pm AEDT

RBA press conference - 3.30 pm

S&P 500: down 16 points or 0.32%

Dow: down 274 points or 0.71%

Nasdaq: down 31 points or 0.2%

Dollar: down 0.34% to 64.82 US cents

Iron ore (Dalian): up 0.21% to US$131.35

Brent crude: up 66 US cents or 0.85% to US$77.99

Gold: down US$10.80 or 0.5% to US$2,042.90

NYSE Arca Gold Bugs: down 1.89%

Bitcoin: down 0.92% to US$42,406

Copper (LME): down 1.27% to US$8,374.50

Nickel (LME): down 1.57% to US$15,960

Uranium (spot price): down 0.94% to US$108

Lithium carbonate (China spot): down 0.36% to US$13,461

Global X Lithium & Battery Tech ETF: down 2.62%

BHP: down 2.61% (US); down 1.64% (UK)

Rio Tinto: down 1.44% (US); down 1.11% (UK)s

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Its interesting that markets watch a simple 25 basis point change in interest rates so closely.
I actually think that rates are at the perfect level historically.

They aren't over top for borrowers. And elderly people get some sort of return.
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