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Morning Research Notes - 11.10.24
Stronger-than-expected inflation data led to a downturn in the U.S. markets on Thursday. Investors adjusted their expectations for potential Federal Reserve rate cuts, shifting their focus towards a more cautious economic outlook amidst rising consumer prices. Commodities had a mixed day: Spot gold rose by 0.9% to $2,630.88 per ounce, while Brent crude surged 3.8% to $79.51 per barrel. In contrast, iron ore prices slipped by 0.2%, closing at $104.70 per tonne.
On Thursday, Wall Street closed lower as stronger-than-expected inflation data complicated the outlook for future rate cuts from the Federal Reserve. The S&P 500 and Dow Jones Industrial Average both fell by 0.4%, while the NASDAQ Composite dipped 0.2%. The U.S. Consumer Price Index (CPI) rose 0.2% in September, exceeding expectations, as core CPI increased by 3.3% annually, also higher than forecasts. This prompted investors to adjust their expectations for rate cuts, reducing the likelihood of a larger cut in November. Amid ongoing commentary from Fed officials, Atlanta Fed President Raphael Bostic indicated he might support smaller rate cuts or even maintaining current rates if inflation remains elevated. Focus has also shifted to the upcoming third-quarter earnings season, with major banks like JPMorgan and Wells Fargo set to report results on Friday. In other market news, Delta Air Lines shares fell on lower-than-expected earnings guidance, Tesla faced attention ahead of a robotaxi event, and AMD shares dropped as it showcased new AI chip developments.
On Thursday, the Australian stock market closed positively, with the ASX 200 gaining 0.43%. Key sectors such as Materials, Financials, and Info-Tech saw increases of 1.62%, 0.2% and 0.23% respectively. However, the Healthcare and Utilities sectors declined by 0.28% and 0.86%. Major commodities ended the day in the red, with Aluminium, Copper, Zinc, and Nickel posting losses of 1.52%, 0.72%, 2.66%, and 0.83% respectively.
Chart of the day
Australian household wealth reached a record $16.2 trillion in March 2024, with residential property accounting for 67.9%, up from 61.7% in 2020. Many households and self-managed superannuation funds (SMSFs) remain heavily invested in property, while their exposure to higher-yielding assets like private credit is limited. If property values are to fall, facing increasing pressure, it is likely to impact the broader economy.
Source: Livewire
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