The Fed's meeting minutes gives no sign of interest rate cuts


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Note: Figures recorded at 7:45am AEDT. The closing figures and video recording will be available at 9:00am AEDT.

Stocks were down Tuesday as traders assessed the latest Federal Reserve meeting minutes, where officials gave no indication of interest rate cuts.

The Federal Reserve has expressed the need for a "restrictive" monetary policy due to concerns about stubborn or rising inflation, keeping the benchmark interest rate unchanged at 5.25% to 5.5% during their October meeting.

Fed funds futures indicate widespread expectations of no change in the Federal Open Market Committee's policy at its upcoming December meeting, with potential rate cuts anticipated starting in May.

Meanwhile, high interest rates have had a negative impact on the housing market, with October's existing home sales falling to 3.79 million units, the slowest pace since August 2010 and a 14.6% decrease from the previous year.

The Dow Jones Industrial Average slipped 97 points, or 0.3%. The S&P 500 also dipped 0.3%, and the Nasdaq Composite fell 0.6%.

Lowe’s declined 3.3% after reducing its full-year sales outlook. Clothing retailer American Eagle tumbled 15% after weaker-than-expected operating income guidance for the full year.

Meanwhile, e-commerce giant Amazon shed 1.8% after CNBC’s David Faber reported citing sources that former CEO Jeff Bezos may be selling more shares, after offloading 1.67 million shares last week.

Traders will also turn to earnings from Nvidia and HP. Nvidia shares hit an all-time high on Monday, but dipped 0.6% on Tuesday.

The strong performance of the largest US technology stocks has weighed down mutual fund performance, and this trend is expected to persist into the new year, according to Goldman Sachs.

Despite portfolio managers increasing their exposure to these tech stocks in the September quarter, the average large-cap fund remains significantly underweight, with a 647 basis points difference.

The remarkable 72% year-to-date return of these tech stocks, compared to a mere 6% return for the rest of the S&P 500 stocks, has created challenges for mutual fund managers due to their concentration in these outperforming stocks.

In commodity-related news, oil prices were largely steady as traders awaited the OPEC meeting, with Brent crude at $82.45 a barrel and West Texas Intermediate at $77.77, while OPEC+ considers deeper production cuts and the International Energy Agency predicts a slight supply surplus in the oil market in 2024.

Currency

One Australian dollar at 7:45 AM was buying 65.56 US cents.
 
Figures around the globe

European markets closed mostly lower. London’s FTSE fell 0.19 per cent, Frankfurt closed flat, and Paris closed 0.24 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 0.10 per cent, Hong Kong’s Hang Seng fell 0.25 per cent while China’s Shanghai Composite closed 0.01 per cent lower.

The Australian share market closed 0.28 per cent higher at 7078.

Ex-dividends
Nufarm (ASX:NUF) is paying 5 cents unfranked
US Student Housing REIT (ASX:USQ) 0.5292 cents unfranked

Dividends payable
Brickworks (ASX:BKW)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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