US equities finished modestly lower on Tuesday after Fed Chair Jorome Powell confirmed there was no rush to cut interest rates.
United States
Speaking on Tuesday, Powell noted the Fed would keep rates unchanged “as long as needed”. Earlier on Tuesday, Fed Vice Chair Andrew Brenner also noted they expect inflation to continue to moderate but persistent pressures would warrant holding interest rates higher for longer. Thomas Barkin of the Richmond Fed added recent data had been supportive of a soft landing.
The S&P500 edged -0.21% lower along with the Nasdaq Composite -0.12% and Russell 2000 -0.42% while the VIX was also modestly lower at 18.40.
Europe
European equities were sharply lower, following larger loss from Wall Street on Monday. The Euro Stoxx 600 declined -1.53% along with the DAX -1.44%, CAC -1.4% and FTSE100 -1.82%. The weakness comes despite Francois Villeroy de Galhau reiterating that the central bank would likely soon begin lowering interest rates, in contrast to Fed officials. Elsewhere, the Bank of England’s Andrew Bailey noted there was strong evidence inflation would continue to come down in the UK. Data overnight for the UK showed -156k jobs were lost in February, with the unemployment rate rising to 4.2% from 3.9% previously, above estimates of 4%.
Australia
The ASX is expected to open lower this morning, with ASX200 futures down -23 points or -0.3% to 7,612. The index slumped -1.81% on Tuesday following a weak lead from overseas markets, although losses accelerated on weaker-than-expected Chinese data. Over the 12 months to March, retail sales in China rose 3.1% well below the 4.8% forecast and industrial production gained 4.5% also missing estimates of 6%. Offsetting this somewhat was higher GDP which rose 5.3% vs 4.8% forecast. In reaction to the data, and generally being a “risk-off” currency, the Australian dollar fell -0.62% to 0.6407.
Commodities
Oil prices were little changed overnight with WTI and Brent crude down just -0.06% and -0.39% respectively. Iron ore futures were -2.51% lower on Tuesday following the latest Chinese data, although have rebounded 1.33% this morning to US$110.85 while copper fell -1.72%. Gold was little changed at US$2,382 an oz while silver fell -2.65%.
Economic Calendar
Australian Leading Index (MoM Mar) 11:00
UK Inflation (YoY Mar) 16:00
Fed Beige Book 04:00
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.
