Fed Chair Powell says market shouldn't be too optimistic about rate cuts this year. Picture Getty
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The ASX is poised to fall again on Tuesday, tracking the selloff in New York. At 8am AEDT, the ASX 200 index futures contract was pointing down by -0.4%.
Overnight, the S&P 500 fell by -0.32%. The blue chips Dow Jones index was down by -0.71%, and the tech-heavy Nasdaq slipped by -0.2%.
Fed Chairman Powell told a 60 Minute interview that market expectations of six rate cuts in 2024 were too optimistic.
“Well, we have a strong economy. Growth is going on at a solid pace. The labor market is strong: 3.7% unemployment. And inflation is coming down.
“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” Powell said.
His comments further scaled back bets on rate cuts, with the 10-year Treasury yield rising further by 13 basis points to 4.17%.
To stocks, McDonald’s fell -3.75% as Q4 revenue missed estimates.
Nvidia rose +4.8% to set a record high again, while Tesla fell -3.7% to a nine-month low.
Snapchat meanwhile fell -1.75% after the company said it will cut about 10% of its global workforce.
Back home, the RBA will hand down its rates decision at 2.30pm AEDT today.
The RBA board had its first ever two-day policy meeting that commenced yesterday.
The new meeting format is similar to the US Fed, and could deliver a “further softening of its already mild tightening bias,” according to AMP’s Dr Shane Oliver.
The S&P 500 has set six new all-time highs in 2024, all in January.
Sam Stovall, chief investment strategist of CFRA Research, told Forbes statistics suggest that whenever the S&P 500 set a new high in January, additional new highs were set in February 74% of the time.
“What’s more, whenever there were new highs in both January and February, the full-year return averaged +15.8% — and rose in price 88% of the years.”
“That 15.8% tops the 9.2% annual average for all years since 1954, which was the year the S&P 500 set its first all-time high after the stock market crash of 1929,” Stovall said.
However Yung-Yu Ma, chief investment officer at BMO Wealth Management, also told Forbes that investors should be cautious given there may be limited upside in the near term.
“Our message for investors is to maintain balanced risk that fits with the current backdrop and include high-quality fixed income investments in portfolios, which provides both yield and stability,” Ma said.
Gold price fell further by -0.70% to US$2,024.29 an ounce.
“In my opinion, the downward trend of the gold price extends to below US$2020…” said Rania Gule, market analyst at XS.com
Oil prices lifted by almost +1%, with Brent now trading at US$78.02 a barrel.
The benchmark 10-year US Treasury yield skyrocketed further by 13 basis points (bond prices lower) to 4.17% after comments by Fed Chair Powell aired last night.
Iron ore futures slipped by -0.5% to US$125.70 a tonne.
The Aussie dollar fell a further -0.4% to US64.82c as the USD appreciated against all major currencies.
Meanwhile, Bitcoin was down -1% % in the last 24 hours to US$42,368.
RLF AgTech (ASX:RLF)
Half year FY24 unaudited revenue was $3.9 million, around 40% higher than the pcp. The company forecasts that around 25% of its annual revenue would be generated during this half. RLF said it remains on track to achieve the market guidance range of $15m to $16m for the full year of FY24.
Janison Education (ASX:JAN)
Janison announced that it has signed an agreement with the NSW Department of Education and Cambridge University Press & Assessment to deliver the state’s selective education placement tests as a computer-based test, via its digital assessment platform. The agreement is expected to generate up to $45m in revenue, provided all work stages are approved.
AFT Pharmaceuticals (ASX:AFP)
AFT announced that Maxigesic IV, the patented intravenous form of pain relief medicines, has today been launched in the US by its licensee, Hikma Pharmaceuticals. The launch of the medicine, under the brand Combogesic IV, is the first patented, NZ developed medicine with clinical studies in the world’s largest healthcare market. The first commercial sale of the medicine in the US is expected in the coming weeks, a milestone that will trigger a US$6 million licensee fee to AFT.
Infini Resources (ASX:I88)
Drone magnetic survey, MMI soil sampling, desktop geological studies and review of historical data have delivered multiple lithium exploration target areas. Three major greenstone target corridors of interest measuring ~6km, ~6km and ~5km in length were identified at Paterson Lake Lithium Project. In addition, seven large lithium geochemical anomalies were identified in MMI soil sampling results.
Verbrec (ASX:VBC)
The engineering company said it’s on track to meet operational savings goals, along with improved gross margins in H1 FY24, which is expected to be between 33.7% and 36.1% compared to 25.5% in the pcp. Looking ahead, Verbrec said it will continue to invest in its core businesses, focussing on growth areas including electrification, gas market transition and green commodities.
At Stockhead we tell it like it is. While RLF AgTech is a Stockhead advertiser, it did not sponsor this article.
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