The Australian sharemarket has opened lower as the profit reporting season extends into its second week and global markets brace for the latest news on inflation in the US economy.
The S&P/ASX200 dropped 15 points, or 0.2 per cent, to 7,418.70 at 10.05 am AEDT.
Materials, industrials, health care and tech all suffered losses, while consumer staples was the only sector to open in the green. Sleep disorder and breathing devices company ResMed and consumer electronics giant JB-Hi Fi lost 1.6 per cent and 1.65 per cent, respectively. Carsales.com and SEEK were also in the red.
Investors are looking to see what the second week of company earnings will bring.Credit:Getty
The big miners Rio Tinto and BHP took losses in early trade, while Fortescue had a slight bump of 0.4 per cent. Among the early lifters were IAG and Ampol, gaining just over 1 per cent each, while gas and oil giant Santos was up 1.6 per cent.
The lacklustre start to the trading week comes after stocks indexes on Wall Street drifted to a mixed finish on Friday, ending the worst week for stocks and bonds this year so far as investors were coming to grips with the idea that the US central bank may have to keep interest rates higher for longer as it wages a war against inflation.
The S&P 500 rose 0.2 per cent on Friday, but it still ended the week with a drop of 1.1 per cent. The Dow Jones Industrial Average gained 0.5 per cent, while the Nasdaq composite fell 0.6 per cent.
Wall Street has ramped up bets on the Fed’s peak rate to around 5.2 per cent, from under 5 per cent earlier this month, amid a barrage of hawkish remarks from US officials that followed a hot jobs market report. And that’s not all. Traders who had been positioning for the central bank to hike only once more are suddenly being confronted with wagers on at least three more increases.
That’s why the US consumer price index out on Wednesday Australian time is seen as a litmus test for the Fed’s ability to thwart inflation amid the most-aggressive tightening cycle in decades. Core CPI will either point to the need to push further into restrictive territory or reflect the progress policymakers have made toward securing the anchor of inflation expectations, said Ian Lyngen at BMO Capital Markets.
“The new year’s bullishness has quickly faded as investors recalibrated forward expectations in the wake of the employment report,” Lyngen said.
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