Outlook for the day: Negative after Wall Street pared two days of gains ahead of tonight's Federal Reserve interest rate decision.
ASX futures: down 52 points or 0.66%
Overnight themes:
US stocks broke a two-session win streak as investors turned risk-averse ahead of tonight's Federal Reserve monetary policy decision and commentary. a breakthrough in Ukraine-Russia peace negotiations was offset by negative developments in the Middle East.
The S&P 500 dropped 1.07% back towards correction territory. Declines in growth stocks outweighed shallow gains in healthcare providers and energy producers. The growth-focussed Nasdaq shed 1.71%. The Dow lost 260 points or 0.62%.
The Federal Reserve is widely expected to leave benchmark interest rates unchanged when it concludes a two-day meeting tonight. The odds on no change are 99%, according to CME's FedWatch tool. However, investors fear what the central bank's updated summary of economic projections may contain after a volatile start to Donald Trump's second term in the White House.
"There's just great uncertainty here about the tariffs, how extensive they are going to be, how that's going to economically impact us, how much the Fed might ease eventually and the economy in general... There is a lot of confusion out there, and when there's confusion, when there isn't a real opportunity for stocks to go up and for companies to expand and make more money, there's fear" - Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder (per Reuters).
Inflation worries were stoked by news that import prices increased by 0.4% for a second month in February, dashing hopes for relief following January's increase. Goldman Sachs hiked its inflation forecast to reflect the new data. "Import prices from China are picking up even though the series in this report excludes tariffs. Chinese firms do not appear to be lowering their prices to absorb the 10% tariff," Conrad DeQuadros, senior economic advisor at Brean Capital, told Reuters.
The inflation news overshadowed a sharp rebound in house building and a rise in factory production. Single-family housing starts expanded by 11.4% in February. Factory production increased 0.9%.
Notable losses overnight included Tesla -5.34% and Nvidia -3.43%. The three sectors dominated by Big Tech lost between 1.65% and 2.14%. The two sectors with the biggest weighting on the ASX - financials and materials - both shed around 0.1%. Healthcare gained 0.12%. Energy put on 0.22%.
Gold broke new ground as rising tensions in the Middle East added to haven-buying. Prices surged after the US hit targets in Yemen and Israel launched airstrikes inside the Gaza Strip. Gold futures settled US$ or 1.2% ahead at US$3,040.80 an ounce. The spot price hit a record US$3,038.26 and was lately up US$36.30 or 1.21% at US$3,035.94.
"The escalation in the Middle East tensions – as Israel launched military strikes on Hamas targets in Gaza, which threatens to undermine the ceasefire – has injected a new bid into gold" - Nicky Shiels, head of metals strategy at MKS PAMP SA (per Reuters).
Oil turned lower as a breakthrough in ceasefire negotiations between the Ukraine and Russia overshadowed the apparent collapse of the ceasefire between Israel and Hamas. Russian President Vladimir Putin agreed to a limited ceasefire against Ukraine's energy infrastructure during a call with US President Donald Trump. Brent crude settled 51 US cents or 0.7% lower at US$70.56 a barrel.
“The rationale here is that any peace progress would increase the chances of removing sanctions on Russian oil shipments, increasing global supplies” - Fawad Razaqzada, market analyst at City Index and FOREX.com (per MarketWatch).
Copper scaled a 10-month high in the US and a five-month peak in London amid speculation about the likely size of US tariffs on copper imports. Benchmark futures were lately up 1.03% on Comex at US$5.01 a pound, their strongest since May 2024. On the London Metal Exchange, benchmark copper overcame early weakness to advance 0.41% to US$9,902 a metric ton. “It’s become all about speculating on the spread between London and New York. The big driver is whether we’re going to see 25% tariffs, no tariffs or somewhere in between,” Ole Hansen, head of commodity strategy at Saxo Bank, told Reuters.
Iron ore fell for a second session in the wake of weak Chinese construction data. Benchmark ore on the Dalian Commodity Exchange ended daytime trade 0.58% lower at US$107.45 a metric ton. The Singapore benchmark was little changed at US$102.10. "The latest new construction data still showed a dramatic fall, ruling out the possibility of a quick recovery in steel demand from the sector any time soon, weighing on prices of steel and its feedstocks," Pei Hao, senior analyst at the international brokerage Freight Investor Services (FIS), told Reuters.
Key events today:
Leading index - 10.30 am AEDT
US Federal Reserve interest rate decision and press conference - tonight
S&P 500: down 60 points or 1.07%
Dow: down 260 points or 0.62%
Nasdaq: down 305 points or 1.71%
VIX: up 5.8% to 21.7
US 10-year treasury yield: down 17 points to 4.289%
Dollar: down 0.3% to 63.61 US cents
Iron ore (Dalian): down 0.58% to US$107.45
Brent crude: down 51 US cents or 0.7% to US$70.56
Gold (futures): up US$34.70 or 1.2% to US$3,040.80
Gold (spot): up US$36.30 or 1.21% to US$3,035.94
Silver (spot): up 24 US cents or 0.7% to US$33.99
Palladium (spot): up 50 US cents or 0.05% to US$958.50
Antimony (China ore): up 2.63% to US$19,178
NYSE Arca Gold Bugs: up 0.72%
Bitcoin: down 2.53% to US$81,958
Copper (LME): up 0.41% to US$9,902
Nickel (LME): down 0.82% to US$16,275
Lithium carbonate (China spot battery grade): up 0.21% to 9,168 yuan
Global X Lithium & Battery Tech ETF: down 0.26%
Uranium (spot): up 0.11% to US$499.50 per lb (NB: source has switched pricing unit from yellowcake to spot uranium. Implied yellowcake price is US$56.73. More info available at: https://www.yellowcakeplc.com/)
Global X Uranium ETF(URA): down 0.77%
BHP: down 0.06% (US); up 0.28% (UK)
