US equities were mostly higher on Tuesday despite bond yields rising after a $42 billion Treasury auction.
United States
The S&P500 edged up 0.17%, along with the Nasdaq Composite 0.37%, the Dow Jones was -0.25% lower while the Russell 2000 climbed 1.35% on Tuesday. Bond yields rose after a Treasury auction despite data that was weaker than expected. The 2-year yield was 1.4 basis points to 4.71% with the 10-year yield also 3.2 basis points. In terms of economic data overnight, durable goods orders declined -6.1% in January, below expectations of a -4.5% drop while consumer confidence for February came in at 106.7 well below forecasts of 115.
Ahead of GDP and PCE inflation data this week, traders have now pared back expectations of rate cuts to just 3 this year, in line with the Fed’s own forecasts. In a speech overnight, Fed Governor Michelle Bowman repeated they expect inflation will continue to decline but it is too soon to begin rate cuts.
Europe
European equities closed higher on Tuesday with little economic data to guide investors other than Germany’s consumer confidence, which was in line with expectations at -29 for March. The Euro Stoxx 600 was up 0.18% along the DAX 0.76% and CAC 0.23% while the FTSE100 was little changed. In currencies, the Euro edged -0.06% lower to 1.0844 along with the Pound -0.03% to 1.2681 while bond yields were modestly higher across the region, line with moves in the US.
Australia
The ASX is expected to rise this morning with ASX200 futures 21 points or 0.28% higher at 7,642. The index edged up 0.13% on Tuesday with gains in financials 0.48% offsetting a -0.39% decline in materials. Among individual names, Coles rose 5.48% after beating earnings expectations, with shares in Reece rallying 18.3% after saying profit rose due to a backlog of work amid a shortage of tradies. On the other side, Johns Lyng was a notable underperformer, dropping -13.2% after reporting a decrease in first half profit to $23.4m, below expectations. We continue to see an uptick in M&A activity on the ASX, with shares in CSR up 5.01% after agreeing to a $4.5 billion takeover by France’s Saint-Gobain. The Australian dollar is little changed overnight at 0.6543 ahead of this morning’s monthly inflation estimate for January, expected to show an uptick to 3.6% from 3.4% over the 12 months. Also in focus is an RBNZ rate decision at midday AEDT where no change is expected to 5.5% interest rate.
Commodities
Oil prices extended gains overnight, with both WTI and Brent crude up 1.42% and 1.13% respectively. Iron ore futures rose 1.81% on Tuesday, although are softer by -0.57% this morning at US$116.85 with copper also up 0.27%. Gold edged -0.08% lower to US$2,029.60 an oz, along with silver -0.17% while Bitcoin rose 4.59% to US$57,165.
Economic Calendar
28th February 2024
Australian Monthly CPI (YoY Jan) 11:30
RBNZ Rate Decision 12:00
US GDP (QoQ Q4) 00:30
Fed Bostic Speech 04:00
Fed Collins Speech 04:15
Fed Williams Speech 04:45
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
