In US economic data, retail sales fell 1.1% in December (survey: -0.9%). The producer price index (PPI) dipped 0.5% in December (survey: -0.1%). The annual growth rate of the PPI fell from 7.3% to 6.2% (survey: 6.8%). The core PPI (ex-food and energy) was up 0.1% in December (survey: +0.1%). Annual growth of the core PPI eased from 6.2% to 5.5% (survey: 5.6%). Industrial production fell 0.7% in December (survey: -0.1%). Business inventories rose 0.4% in November (survey: +0.4%). The NAHB housing market index rose from 31 to 35 in January (survey: 31).

The US Federal Reserve (‘Fed’) Beige Book, indicated that US economic activity was “relatively unchanged” from the “about flat or up slightly” picture portrayed in the previous report.

European share markets extended their winning streak on Wednesday, supported by upbeat company earnings. Mining stocks led gains, up 2.4%. The continent-wide FTSEurofirst 300 index lifted 0.3%. But the UK FTSE 100 index dipped 0.3%, despite annual British consumer price inflation easing from 10.7% to 10.5% in December (survey: 10.5%).

US share markets tumbled on Wednesday as weak US economic data rekindled investor concerns about the outlook for growth and earnings. In speeches, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester both stressed the need to raise rates beyond 5% to tackle inflation. Shares of IBM fell 3.3% after Morgan Stanley downgraded the stock to “equal weight” from “overweight.” Microsoft’s shares slid 1.9% after it
announced plans to cut 10,000 jobs. At the close of trade, the Dow Jones index fell 614 points or 1.8%. The S&P 500 index lost 1.6%. And the Nasdaq index shed 138 points or 1.2%.

US government bonds rose sharply on Wednesday (yields lower) after data showed that US retail sales fell more than expected in December and as the Bank of Japan maintained its bond yield cap. The US Treasury sold US$12 billion of 20-year bonds at a yield of 3.678% into strong demand. US 10-year Treasury yields fell 17 points to near 3.37%. And US 2-year yields dropped 12 points to near 4.08%.


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Major currencies were mixed against the US dollar in European and US trade. The Euro rose from US$1.0766 to US$1.0882 and was near US$1.0790 at the US close. The Aussie dollar fell from US70.60 cents to US69.34 cents and was near US69.35 cents at the US close. And the Japanese yen firmed from 131.48 yen per US dollar to JPY127.60 and was near JPY128.80 at the US close.

Global oil prices fell around 1% on Wednesday as US recession fears countered a more positive China demand outlook. The Brent crude oil price dipped US94 cents or 1.1% to US$84.98 a barrel. And the US Nymex crude oil price shed US70 cents or 0.9% to US$79.48 a barrel.

Base metal prices advanced on Wednesday. The US copper futures price rose 0.3% to its highest level since June 2022 as speculators bet that low inventories and rising Chinese demand will lift prices. The US aluminium futures price lifted 0.6%.

The gold futures price slid US$2.90 or 0.2% to US$1,907 an ounce. Spot gold was trading near US$1,904 an ounce at the US close. Iron ore futures rose US24 cents a tonne or 0.2% to US$121.19 a tonne on China growth optimism.

Ahead: In Australia, employment data is released. BHP Group is expected to provide a quarterly production update. In the US, data on housing starts, building permits and jobless claims are scheduled with the Philadelphia Fed manufacturing index. Fed Vice Chair Lael Brainard speaks. Netflix and Procter & Gamble release earnings.

Originally published by CommSec