The Australian market looks set to open lower after Wall Street stumbled for a second straight session, weighed down by caution from the US Federal Reserve and a supply shock in copper. ASX 200 futures were down 41 points (-0.46%) at 8:30 am AEST, pointing to fresh weakness after yesterday’s inflation-driven sell-off.
Wall Street dips as valuations questioned
US stocks eased overnight, extending their modest pullback from record highs. The S&P 500 slipped 0.3% to 6,638, the Dow fell 0.4% and the Nasdaq dropped 0.3%, while small caps were hit harder with the Russell 2000 down nearly 1%.
Fed Chair Jerome Powell rattled markets by acknowledging that equity valuations look stretched by many measures, giving traders an excuse to take profits after a strong run. US Treasury yields climbed again, with the 10-year at 4.15%, as investors priced in fewer rate cuts this year.
Corporate headlines added to the cautious mood. Micron Technology Inc (NASDAQ:MU) lost ground despite strong memory-chip sales, Oracle Corp (NYSE:ORCL, ETR:ORC) slid on bond-raising news, and Freeport-McMoRan Inc (NYSE:FCX, ETR:FPMB) tumbled 17% after declaring force majeure at its Grasberg mine in Indonesia, one of the world’s biggest copper operations. On the upside, Lithium Americas Corp (TSX:LAC, NYSE:LAC) soared almost 100% after reports the Trump administration may take a 10% stake in the company — a move that electrified the lithium sector globally.
ASX recap: Inflation and banks drag index lower
Locally, the S&P/ASX 200 shed 81.4 points (-0.92%) on Wednesday to close at 8,764.5, as hotter-than-expected inflation figures kept pressure on rate cut hopes. The August CPI came in at 3.0% year-on-year, above expectations of 2.9%, and back at the top of the RBA’s target range.
Financials were the heaviest drag, down 1.8%, followed by healthcare (-1.3%) and tech (-0.9%). Materials edged just 0.1% lower despite firm iron ore prices, while energy and utilities posted small gains. Small caps fared relatively better, with the Emerging Companies index up 0.1%.
Commodities and currencies
Copper was the star mover, surging more than 4% to US$9,529/t after Freeport’s Grasberg disruption raised concerns over global supply. Oil also rallied, with Brent above US$69 a barrel and WTI near US$65, supported by falling US inventories and geopolitical tensions.
Gold eased 0.6% to US$3,741 an ounce, pulling back from record highs, while iron ore held steady around US$105/t. Lithium carbonate prices in China rose 1.2% to US$11,402/t, adding momentum to the battery metals rally sparked by US government interest in Lithium Americas.
The Australian dollar was steady at US65.8 cents this morning, while Bitcoin continued to climb, trading above US$113,600.
What’s on today
On the corporate calendar, it’s mostly dividends and a handful of earnings keeping investors busy, with payouts from heavyweights including BHP Group Ltd (LSE:BHP, ASX:BHP), Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF), Ramsay Health Care Limited (ASX:RHC) and Telstra Corporation Ltd (ASX:TLS), while Liontown Resources (ASX:LTR) is due to release earnings. Suncorp hosts its AGM. Offshore, US GDP and durable goods orders will be closely watched.
It’s a slow morning for small-cap corporate news as well, though AuKing Mining Ltd (ASX:AKN) has reported early survey results pointing to potential extensions of carbonatite-hosted niobium and rare earth mineralisation at its Myoff Creek project in British Columbia. The company also confirmed it is moving to full ownership of the Cloncurry Gold Project, with completion expected late October.