US equities closed higher on Thursday while bond yields were mixed as inflation came in line with estimates.
United States
For the 12 months to January, headline inflation rose 2.4% as forecast and up 0.3% over the month. Core inflation was also as forecast, at 2.8% over the year and 0.4% over the month. The data alleviates concerns of a more significant inflation increase, with traders betting a rate cut could come as soon as June.
The S&P500 rose 0.52% with technology and communications the top performers, up 1.17% and 1.2% respectively. The Nasdaq Composite and Russell 2000 also rose 0.90% and 0.71% respectively. Shorter-dated yields were higher, with the 2-year up 0.6 basis points to 4.644% while the 10 and 30-year rates declined -1.4 and -3 basis points.
Europe
European equities were mixed on Thursday despite the boost in sentiment that lifted US markets, with the Euro Stoxx 600 unchanged, while the DAX and FTSE100 rose 0.444% and 0.07%, with the CAC finishing -0.34% lower. In terms of economic data, German unemployment increased by 11k compared to 7k forecast, with the unemployment rate remaining unchanged at 5.9% compared to estimates for a modest decline to 5.8%. Traders will now turn their attention to tonight’s Eurozone inflation data, forecast to have risen 2.5% over the year and core prices expected to have risen 2.9%.
Australia
The ASX is expected to open higher this morning, with ASX200 futures up 20 points or 0.26% to 7,680. The index rallied 0.5% on Thursday following positive corporate earnings, with retailer Harvey Norman up 4.4% after sales improved in January as part of a trading update, lifting other retailers including JBH 1.1% and WES 1.1%. Shares in miner S32 climbed 2.8% after flagging a potential deal to sell its Illawarra coal business while Ramsay Health Care jump 7.3% after reporting a net profit for the six months to December of $758.5m vs $290.2m a year earlier. In economic data. Business confidence slipped to 34.7 in February from 36.6 previously, while retail sales for January rose 1.1% below expectations of 1.5%. The Australian Dollar initially rallied overnight before paring back gains to be little changed at 0.6496.
Commodities
Both WTI and Brent crude were lower by -0.66% and -0.51% overnight. Iron ore futures rose 0.41% in Singapore on Thursday and are extending gains this morning, up a further 1.17% with copper edging 0.09% higher. Gold rose 0.51% to US$2,044.90 an oz with silver up 0.93% to US$22.66 and Bitcoin extended a run of gains for a sixth consecutive day, up 2.37%.
Economic Calendar
1st March 2024
Chinese PMI (MoM Feb) 12:30
Eurozone Inflation (YoY Feb) 21:00
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.
