Outlook for the day: Negative following declines in Europe and a sharp fall in iron ore during a US market holiday.
ASX futures: down 21 points or 0.28%
Overnight themes:
Rising bond yields help drive European stocks lower while Wall Street is closed for Martin Luther King Jr Day.
The pan-European Stoxx 600 loses 0.46%. Britain's FTSE 100 sheds 0.39%. Germany's DAX index gives up 0.49%. In France, the CAC 40 loses 0.72%.
Stocks come under pressure as European Central Bank officials rein in expectations that interest rate cuts are imminent. The bank's chief economist warns cutting rates too quickly could unleash a second wave of inflation. The president of Germany's Bundesbank says it is too soon to discuss rate cuts.
"We do have this disjoint between market expectations and what central banks are planning on doing... We could see some downside pressure for equities, especially in Europe, once markets adjust their expectations that rate cuts are inevitably going to come, but not as soon as expected" - Daniela Hathorn, senior market analyst at Capital.com (per Reuters).
Also fuelling selling: news that Germany's economy contracted 0.3% last year. Rising interest rates and weakening domestic and international demand dent GDP within Europe's manufacturing powerhouse.
A strengthening greenback weighs on European mining stocks. Banks also weaken. Travel stocks buck the downtrend, gaining almost 1%.
US equity futures are flat to mildly negative this morning. S&P 500 futures are down 0.06%. Dow futures drop 0.05%. Nasdaq futures trade unchanged.
A retreat in iron ore accelerates after China's central bank dashes hopes of a rate cut. China-traded ore falls for the seventh time in eight sessions after the People's Bank leaves the medium-term interest rate unchanged yesterday. The most-traded May contract sinks 3.17% to US$130.10 a metric ton.
“The weakness in the ore market is partly because macroeconomic uncertainties mounted after the central bank did not cut rate” - Pei Hao, Shanghai-based analyst at international brokerage FIS (per Reuters).
Key events today:
January consumer sentiment - 10.30 am AEDT
World Economic Forum annual meeting - tonight
US Empire State manufacturing - tonight
European Stoxx 600: down 0.54%
S&P 500: closed
Dow: closed
Nasdaq: closed
Dollar: down 0.46% to 66.58 US cents
Iron ore (Dalian): down 3.17% to US$130.10
Brent crude: down 14 US cents or 0.18% to US$78.15
Gold (live price): up US$7.50 or 0.37% to US$2,059.10
NYSE Arca Gold Bugs: Wall Street closed.
Bitcoin: up 1.19% to US$43,069
Copper (LME): up 0.44% to US$8,376
Nickel (LME): up 0.12% to US$16,270
Uranium (spot price): steady at US$108
Lithium carbonate (China spot): down 0.29% to US$13,381
Global X Lithium & Battery Tech ETF (UK listing): down 1.67%
