Overnight – Hotter than expected inflation takes rate cuts off the table
Stocks ended down overnight after a hotter-than-expected U.S. inflation reading added to worries that the Federal Reserve would not cut interest rates anytime soon, while CVS Health and Gilead Sciences rallied after upbeat quarterly reports.
the latest U.S. Consumer Price Index (CPI) data, which showed stronger-than-expected inflation readings for January 2025. The CPI increased 0.5% month-over-month, while the core CPI rose 0.4%. The results raised concerns about inflationary pressures continuing into 2025.
U.S. consumer prices increased in January by the most in nearly a year and a half, reinforcing the Fed’s message that it was in no rush to resume cutting rates. The surge in prices offered a cautionary note to President Donald Trump’s push for tariffs on imported goods, which economists have panned as inflationary. Interest rate futures now suggest traders see about a 70% chance the Fed will reduce rates by another 25 basis points by the end of 2025, down from about an 80% chance on Tuesday, according to CME Fedwatch.
Fed Chair Jerome Powell also began his second day of testimony before Congress on Wednesday. On Tuesday, he reiterated to the Senate Banking Committee that the U.S. central bank was in no rush to cut rates again.
With the fourth-quarter reporting season more than halfway through, S&P 500 companies are expected to post year-over-year earnings growth of 14.8%, surpassing initial expectations of less than 10% at the start of 2025
ASX SPI 8486 (+0.04%)
ASX earnings will dominate again today with the ASX, IAG and TWE the headliners
Company Specific
- IAG’s – profit leapt 91.2 per cent in the half-year to December, boosted by a period of favourable weather and the release of a $200 million release from the group’s Covid business interruption provision.
- Homeco Daily Needs REIT’s funds from operations were flat in the six months to December, but the company said it remains on track to hit full-year guidance.
- Chemist Warehouse is joining the ASX on Thursday morning when it finalises its merger with wholesaler Sigma Healthcare
