The Australian share market weakened as caution ahead of the release of key US inflationdata outweighed better than expected earningsreports from several companies.
After gaining ground in early trade, the benchmark S&P/ASX200 index closed 0.25 per cent lower at 5,841.2 points.
The healthcare sector was a rare bright spot, as most other sectors lost ground.
That was due to biotech giant CSL's 5.1 per cent gain to $149.29, as its half-year profit growth beat expectations, driven by strong flu vaccine sales.
CMC Markets chief market analyst Ric Spooner said investors were holding back ahead of the latest US consumer price index data, which is critical to the Federal Reserve's interest rate decisions.
"One of the things which has driven the recent downdraft in markets is concern about rising bond yields and inflation in the US," he said.
"If we were to see inflation starting to rise or rising more than expected in tonight's data that could be a negative event for markets."
Commonwealth Bank was the biggest weight on the local market, down three per cent as it traded ex-dividend.
The other banks were mixed, with National Australia Bank up 0.4 per cent, Westpac down 0.1 per cent and ANZ 0.3 per cent weaker.
The big miners were also relatively steady, with BHP Billiton up 0.4 per cent and Rio Tinto almost unchanged.
Domino's Pizza dropped 6.1 per cent after it lowered its full year sales growth forecast for its Australian and New Zealand stores.
Insurance Australia Group gained 3.2 per cent as higher insurance premiums contributed to a 24 per cent rise in its half year profit.
Computershare jumped 4.9 per cent after its half year profit grew 14 per cent.
The Australian dollar edged higher against the US dollar to be at 78.77 US cents at the close of local trade.
"The move is about US weakness rather than Aussie dollar strength," Mr Spooner said, noting the greenback was also weaker several Asian currencies, including the Yen.
ON THE ASX:
* The benchmark S&P/ASX200 was down 14.7 points, or 0 25 per cent, at 5,841.2 points.
* The broader All Ordinaries index was down 17 points, 0.29 per cent, at 5,940 points.
* The SPI200 futures contract was down three points, or 0.05 per cent, at 5,790 points.
* National turnover was 2.8 billion securities traded worth $6.1 billion.
CURRENCY SNAPSHOT AT 1700 AEDT:
One Australian dollar buys:
* 78.77 US cents, from 78.64 US cents on Tuesday
* 84.42 Japanese yen, from 85.17 yen
* 63.64 euro cents, from 63.85 euro cents
* 56.66 British pence, from 56.76 pence
* 107.74 NZ cents, from 108.26 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEDT was $US1,334.89 per fine ounce, from $US1,326.45 per fine ounce on Tuesday.
BOND SNAPSHOT AT 1630 AEDT:
* CGS 4.50 per cent April 2020, 1.9836pct, from 1.9828pct on Tuesday
* CGS 4.75pct April 2027, 2.7996pct, from 2.8228pct
Sydney Futures Exchange prices:
* March 2018 10-year bond futures contract at 97.155 (implying a yield of 2.845pct), from 97.13 (implying a yield of 2.87pct) on Tuesday
* March 2018 3-year bond futures contract at 97.87 (2.13pct), from 97.86 (2.14pct).
(*Bond market closes taken at 1630 AEDT previous local session; currency closes taken from 1700 AEDT previous local session)
Wall Street surged on Wednesday as investors shrugged off stronger-than-expected inflation data and snapped up shares of Facebook, Amazon.com and Apple.
The fourth straight day of gains in the S&P 500 saw a return to the “fear of missing out” mentality that accompanied Wall Street’s rally in recent months ahead of a slump last week into correction territory.
Facebook (FB.O) jumped 3 percent while Amazon.com (AMZN.O) and Apple (AAPL.O) rose more than 1 percent. All three fueled the S&P 500 more than any other shares. They, along with Netflix and Alphabet - collectively called the FAANG stocks - were major contributors to last year’s market rally, and some of them have weathered the recent selloff better than the broader market.
“FAANG is still working. And people feel that because they held up during the downturn, you can come back to them and not get hammered if things turn down again,” said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.
“There is still a fear of missing out.”
The Labor Department’s core Consumer Price Index, which excludes the volatile food and energy components, increased 0.3 percent in January, while economists polled by Reuters had forecast an increase of 0.2 percent. However, the year-on-year rise was unchanged at 1.8 percent.
The data raised the specter of rising inflation rates and rekindled fears that the Federal Reserve could be forced to be more aggressive with interest rate increases.
But those inflation concerns were tempered by data showing U.S. retail sales fell 0.3 percent last month, the biggest decline in nearly a year and in sharp contrast to economists’ estimates for a 0.2 percent increase.
“The CPI shows there is some inflation, but it was not through the roof,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville. “People got too pessimistic.”
Underpinning confidence among many investors is the belief that the U.S. economy remains strong and that tax cuts enacted this year will spur corporate earnings and lead consumers to spend more.
At 2:37 pm ET, the Dow Jones Industrial Average .DJI was up 0.68 percent at 24,808.33 points, while the S&P 500 .SPX had gained 1.07 percent to 2,691.38.
The Nasdaq Composite .IXIC added 1.58 percent to 7,124.47.
Benchmark U.S. 10-year Treasury yields US10YT=RR were near their session highs at 2.8894 percent, but a key measure of near-term volatility fell, in contrast to its reaction to strong U.S. jobs and wages data earlier in the month.
The CBOE Volatility index .VIX was down at 20.27 points, slipping below 20 for the first time since Feb. 5 and well below the 50-point mark it hit during last week’s sell-off.
The VIX slipping below 20 is “a very good sign”, said Bucky Hellwig, senior vice president at BB&T Wealth Management. “It shows the volatility is getting priced out of the market.”
Ten of the 11 major S&P 500 sectors rose, with financials .SPSY and information technology .SPLRCT jumping over 3.6 percent.
Advancing issues outnumbered declining ones on the NYSE by a 2.35-to-1 ratio; on Nasdaq, a 2.91-to-1 ratio favored advancers.
Source: Netwealth Morning Business Roundup
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