Stocks on Wall Street were softer as investors dialled back expectations for the US Federal Reserve to cut interest rates after consumer prices rose more than expected in January.
The S&P 500 slipped 0.1% at 7am in Auckland and the Dow Jones Industrial Average declined 0.3% as investors digested the 3% annual pace of inflation in January, which was faster than they'd anticipated.
The data came out as Fed chair Jerome Powell entered his second day of testimony to US policymakers, saying there’s still work to do in taming inflation and that policy will stay restrictive for now.
“This inflation backdrop got the market’s attention, seeing pricing for possible Fed easing this year pare back to just one rate cut, fully priced by December,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “Much stronger than expected US CPI inflation data were market-moving, driving higher US rates, a stronger US dollar and weaker US equities.”
Some of that reversed after US President Donald Trump said he had a long phone call with his Russian counterpart Vladimir Putin, and that the two agreed to open talks on ending the war in Ukraine.
Trump’s comments on the Social Truth platform followed a speech by US Defense Secretary Pete Hegseth outlining the White House’s view on negotiating a settlement to end the war. Hegseth said a return to the pre-Crimea annexation in 2014 borders and Ukraine membership of the North Atlantic Treaty Organisation are both unrealistic.
Brent crude oil futures fell 1.8% to US$75.57 a barrel, with prices under pressure on reports of increased US crude oil inventories and the Organization of the Petroleum Exporting Countries reaffirming plans to hike output from April.
Meanwhile, reports emerged that oil major Chevron plans to lay off between 15% and 20% of its global workforce.
A different world
Across the pond, stocks in London and in Europe were broadly stronger with investors cheered by stronger than expected earnings from the likes of Heineken and ABN Amro.
Local data today include credit and debit card spending in January and the Reserve Bank’s survey of inflation expectations.
The kiwi dollar traded at 56.60 US cents at 7am from 56.65 cents yesterday, having dropped as low as 56 cents in whippy trading.
Meanwhile, earnings seasons continues with rubber goods maker Skellerup due to announce its first-half result today.
Across the Tasman, a slew of results including ASX, Domain Holdings, Downer EDI, Insurance Australia Group, Origin Energy and Treasury Wine Estates are among those reporting today.
Australian futures are pointing to a 0.2% increase for the S&P/ASX 200 index today.
The Chemist Warehouse’s scheme of arrangement with Sigma Pharmaceuticals is effective from today, with new shares to be issued next week.
And the Australian Financial Review reported Telstra is considering selling its datacentre assets.
Reporting by Paul McBeth. Image from Tim Mossholder on Unsplash.
