Australian shares are expected to open lower after Wall Street ended mixed, as stronger signs of economic growth kept longer-term US borrowing costs elevated despite a softer-than-expected inflation reading.
ASX 200 futures were pointing to a decline of 51 points, or 0.6 per cent, at 6.36am AEST. The index had gained 0.9 per cent in the previous session, while the Australian dollar weakened to US69.58¢.
On Wall Street, the S&P 500 fell 0.3 per cent to 7,651.54, marking its third monthly decline in four months. The Dow Jones Industrial Average dropped 443.87 points, or 0.9 per cent, to 50,906.05, while the Nasdaq composite rose 0.2 per cent to 26,861.06.
Trading initially benefited from data showing that US consumer prices rose 3.4 per cent in August from a year earlier, below economists’ expectations of 3.7 per cent. Inflation nevertheless remained above the Federal Reserve’s 2 per cent target.
The figures are closely watched by the Fed because they come from its preferred inflation measure. Traders reduced their expectations of an interest-rate increase next month, putting the probability at 37 per cent, down from roughly even odds a day earlier.
Shorter-term Treasury yields fell briefly, with the two-year yield approaching 4.83 per cent before settling at 4.89 per cent. Longer-term yields moved higher, however, as investors weighed stronger economic activity and concerns about government debt.
The yield on the benchmark 10-year Treasury rose to 5.29 per cent from 5.26 per cent, after falling as low as 5.20 per cent earlier in the session. The 30-year yield increased to 5.64 per cent from 5.59 per cent.
Higher yields can weigh on shares by making borrowing more expensive and reducing the appeal of other investments. Gary Schlossberg, global strategist at Wells Fargo Investment Institute, said: “The consumer remains resilient, in a much better position than previously thought.”
Oil prices also rose amid uncertainty over when crude supplies would be fully restored during the war with Iran. Brent crude, the international benchmark, gained 1.9 per cent to settle at $98.03 a barrel.
Among individual stocks, Hewlett Packard Enterprise gained 3.9 per cent after raising its revenue forecast for its networking business, which has benefited from demand linked to artificial intelligence. MongoDB rose 3.4 per cent after its board expanded its share buyback programme by $US1 billion.
Cal-Maine Foods fell 0.7 per cent after the US egg producer reported a larger quarterly loss than analysts had expected, following a sharp fall in the prices it could charge.
European markets closed lower after a mixed session in Asia. Japan’s Nikkei 225 rose 1.9 per cent, while France’s CAC 40 fell 0.9 per cent.
