Australian shares are poised to edge down on opening after US markets backed away from recent highs following warmer than expected inflation and unemployment numbers.
The S&P 500 was 0.3 per cent lower in afternoon trading. The Dow Jones Industrial Average was down 138 points, or 0.3 per cent, after likewise setting an all-time high the day before, and the Nasdaq composite was 0.1 per cent lower.
Stocks stormed to records in the US in large part on excitement about easing interest rates.Credit: Fairfax
Futures pointed to a downward shift for Australian stocks before the market opens on Friday. Shares on the local bourse ended the day higher on Thursday, led by miners and energy stocks, with the S&P/ASX 200 closing at 35.6 points, up 0.4 per cent to 8223.
Stocks had stormed to records in the US in large part on excitement about easing interest rates, now that the Federal Reserve is cutting them from their two-decade high as it widens its focus to include keeping the economy humming instead of just fighting high inflation.
Lower interest rates ease the brakes off the economy and juice prices for investments, but the pace of further cuts will depend on if inflation continues to head down toward the Fed’s 2 per cent target as it expects.
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Thursday’s report showed inflation slowed to 2.4 per cent in September from 2.5 per cent in August, according to the consumer price index, but economists were expecting an even sharper slowdown to 2.3 per cent. And after ignoring the swings for food, gasoline and other energy prices, underlying trends that economists say can be a better predictor for where inflation is heading were also a touch hotter than expected.
At the same time, a separate report showed 258,000 US workers filed for unemployment benefits last week. That number is relatively low compared with history, but it was a sharper acceleration than economists expected. Hurricane Helene and a strike by workers at Boeing may have helped make the numbers look worse.
In the bond market, Treasury yields rose immediately after the release of the economic data, only to then swing up and down as traders tried to handicap what they would mean for the Fed.
