ASX to slip, Wall St mostly lower, oil retreats

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The yield on the US 10-year note were 4 basis points higher to 3.45 per cent at 4.05pm in New York.

On Wall Street, shares ended lower after a choppy session. The Nasdaq was the worst performer as tech shares slid anew.

Oxford Economics has downgraded its outlook for the US economy: ”Higher-for-longer inflation, more aggressive Fed monetary policy tightening, and negative spillover effects from a weakening global backdrop will combine to push the US economy into a mild recession in H1 2023, in our view.

“Our forecast for 2022 real GDP growth remains unchanged at 1.7 per cent as economic momentum should remain resilient in H2 2022. But we have cut our 2023 forecast by 1ppt to zero.”

Retail sales increased 0.3 per cent last month, also lifted by back-to-school shopping. But data for July was revised down to show retail sales falling 0.4 per cent instead of being unchanged as previously reported. Economists polled by Reuters had forecast sales would be unchanged, with estimates ranging from as low as a 0.5 per cent decline to as high as a 0.5pc increase.

“While consumers remain generally willing to spend, many families, especially those at the lower-to-median end of the income spectrum, are feeling increasingly constrained by elevated prices,” said Gregory Daco, chief economist at EY-Parthenon in New York.

The muted rise in retail sales in August suggests that the ongoing plunge in gasoline prices has so far done little to boost real consumption, which is on course to have barely risen last month, wrote Capital Economics’ Andrew Hunter. “Although aggregate GDP is still set for a rebound in the third quarter, consumption growth appears to have slowed further.”

Daily News | Online News Today’s agenda

Local: BusinessNZ manufacturing PMI August

Overseas data: China industrial production and retail sales at 12pm AEST; Eurozone August CPI; UK retail sales August; US September University of Michigan consumer sentiment preliminary

Daily News | Online News Market highlights

ASX futures down 45 points or 0.7 per cent to 6798 near 6am AEST

  • AUD -0.7% to 67.02 US cents
  • Bitcoin -0.7% to $US19,731 at 5.30am AEST
  • Ether -5.8% to $US1494.60 at 5.30am AEST
  • On Wall St near 4pm: Dow -0.5% S&P -1.1% Nasdaq -1.4%
  • In New York: BHP -0.9% Rio -1.6% Atlassian -1.3%
  • Tesla +0.3% Apple -1.9% Amazon -1.7% Adobe -16.8%
  • In Europe: Stoxx 50 -0.7% FTSE +0.1% CAC -1% DAX -0.6%
  • Spot gold -1.9% to $US1665.60 /oz at 2.10pm New York time
  • Brent crude -3.3% to $US90.99 a barrel
  • Iron ore +0.2% to $US101.05 a tonne
  • 10-year yield: US 3.45% Australia 3.68% Germany 1.76%
  • US prices as of 3.31pm in New York

Daily News | Online News United States

Larry Summers said in a series of tweets that “the Fed is in a difficult position” because Summers’ “read from wage and rent data is that underlying inflation has substantial momentum”.

Summers said “Going forward from here, with terminal Fed funds priced above 4.25 per cent, it will have to be quite aggressive to avoid an overall easing in financial conditions.”

Adobe agreed to buy software design startup Figma in a deal valued at about $US20 billion in a bid to expand its suite of creative tools for professionals.

The deal announced by Adobe, which is a mix of half cash and half stock, confirms an earlier Bloomberg report and would mark the biggest ever takeover of a private software company, according to data compiled by Bloomberg. It’s also Adobe’s biggest acquisition and the market found the deal expensive.

Microsoft’s planned $US69 billion purchase of computer games developer Activision Blizzard faces an in-depth probe in the UK after regulators said the deal could hamper competition.

The Competition and Markets Authority said it decided to kickstart a longer review after Microsoft turned down the chance to offer remedies to address its concerns.

Daily News | Online News Europe

European equities gave up earlier gains to end lower on Thursday, with energy and technology shares declining the most, as worries about tighter monetary policy and geopolitical disruptions shook risk sentiment.

The STOXX 600 index closed 0.7 per cent lower, extending losses to a third straight session. A slump in crude prices on demand worries pulled energy shares down 2.1 per cent.

Technology stocks fell 1.8 per cent and were the biggest drags on the STOXX 600. The sector typically underperforms in a high interest rate environment on concerns over pressure on future earnings.

European banks rose 1.7 per cent, supported by bets of higher interest rates. Morgan Stanley upgraded the banking sector to “overweight”, citing cheap valuations and resilient earnings.

Spanish banking stocks including Bankinter, Sabadell and Caixabank rose more than 4 per cent each after a report stated that Madrid is keen to avoid conflicts with the European Central Bank and could modify a bank tax.

H&M dropped 4.7 per cent after the retailer posted lower-than-expected quarterly sales as shoppers tightened their belts amid soaring energy and food bills and as it struggled to compete with rival Zara.

Germany is in advanced talks to take over Uniper SE and two other large gas importers in a historic step to avoid a collapse of its energy market, according to people familiar with the matter.

State ownership of Uniper, VNG AG and Securing Energy for Europe GmbH, formerly Gazprom Germania GmbH, is the main solution under discussion, the people said, declining to be identified because the information is private. The exact specifics have yet to be agreed but a conclusion could be reached in the coming days, the people said.

Daily News | Online News Commodities

The iron ore market has stabilised with impacts of China’s Covid-19 lockdowns and real-estate woes already priced in, according to a top producer of the steelmaking ingredient.

“The good news is that from now on it can only get better,” said Luciano Siani, head of strategy and business transformation at Vale SA, the world’s second-largest iron ore producer.

Unlike previous downturns in Chinese demand that caused iron ore prices to plummet, they are now likely to hold close to the current level of $US95 to $US100 a tonne since miners are having a hard time supplying the markets, he said in an interview.

“There is no ore available in the near term,” Siani said.

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