Day trading pre-market open February 14

Morning, Valentines. Plenty of red around this morning. It ain't love hearts.


Outlook for the day: Sharply negative after unexpectedly hot inflation data triggers heavy selling on Wall Street as investors revise interest rate expectations.

ASX futures: down 90 points or 1.19%


Overnight themes:

• US stocks tumble as January inflation data dents hopes of several rate cuts this year. The Dow has its worst night in 11 months.
• The Nasdaq sheds 1.8% as treasury yields spike, driving rate-sensitive sectors lower. The Dow loses 525 points after briefly falling more than 700 points. The S&P 500 gives up 1.37%.
• The Russell 2000 index of small caps plunges 4.12%.
• Rising rents help lift the Consumer Price Index 0.3% last month, above economists' expectations for an increase of 0.2%. Headline annual inflation eases less than expected to 3.1% (expected: 2.9%). Core CPI (excluding food and energy) increases by 0.4%, the biggest increase in eight months. Core annual inflation is unchanged at 3.9% (expected: 3.7%).
• “The much-anticipated CPI report is a disappointment for those who expected inflation to edge lower allowing the Fed to begin easing rates sooner rather than later. Across the board numbers were hotter than expected making certain that the Fed will need more data before initiating a rate cutting cycle” - Quincy Krosby, chief global strategist at LPL Financial (per CNBC).
• The 10-year US Treasury yield jumps 13 basis points to above 4.3%, the highest since late November. (Yields broadly reflect the outlook for benchmark lending rates.)
• Stocks had surged to record levels since November in expectation that this year will bring a series of interest rate cuts. Until recent weeks, the market was pricing in the first cut as soon as next month's Federal Reserve meeting. The odds on a May rate cut fall to 38% overnight from around 58% before the CPI report.
• "Many Federal Reserve governors have come out in the last couple of weeks and given various indications that the cuts expected by the market in the first half of the year may have been premature. Now the CPI data are certainly reaffirming that picture" - Bob Elliott, chief investment officer at Unlimited Funds (per Reuters).
• Market-leading megacap stocks post solid falls. Microsoft, Tesla and Amazon lose at least 2%.
• Wall Street's "fear gauge", the VIX, rises to its highest since November.
• All 11 US sectors flash red. Losses range from 0.87% (health) up to 1.96% (consumer discretionary). Gold miners are hit particularly hard as the yellow metal drops 1.8%.
• The Australian dollar is smashed down almost 1.2% to its lowest since mid-November as the greenback surges.
• Nickel rises for a second session amid reports a collapse in prices will force China and Indonesia to reduce output. The two nations, which together account for around 70% of global supply, will likely lower production by "at least 100,000 tonnes", according to Reuters. Such cuts would reduce a market-oversupply and support prices that have become uneconomic at current levels for most Australian producers.
• The domestic earnings season continues today with updates from Commonwealth Bank, AMP and others (more below).

Key event today:

• Earnings season: CBA, AMP, Dexus, Seven Group, Domain Holdings, Downer EDI, GUD, Computershare, Evolution Mining, IDP Education, Fletcher Building, Ridley Corp (source: CommSec).

S&P 500: down 69 points or 1.37%

Dow: down 525 points or 1.35%

Nasdaq: down 287 points or 1.8%

Dollar: down 1.18% to 64.52 US cents

Iron ore (Singapore): down 0.02% to US$128.05

Brent crude: up 77 US cents or 0.94% to US$82.77

Gold: down US$25.80 or 1.8% to US$2,007.20

NYSE Arca Gold Bugs: down 6.5%

Bitcoin: down 2.27% to US$49,050

Copper (LME): down 0.32% to US$8,209

Nickel (LME): up 1.34% to US$16,300

Uranium (spot price): up 2.53% to US$104.50

Lithium carbonate (China spot): untraded at US$13,471 (Lunar New Year holiday)

Global X Lithium & Battery Tech ETF: down 3.65%

BHP: down 2.52% (US); down 1.65% (UK)

Rio Tinto: down 1.99% (US); down 1.29% (UK)