ASX down 0.78%: UK higher than expected inflation data and US retail sales figures

Market Reports

by Peter Milios

The S&P/ASX 200 is 0.78 per cent lower at 7,335.30.

This is due to the impact of UK inflation figures and US retail sales data, which prompted traders to reduce their expectations for interest rate cuts.

Overnight, Wall Street displayed weakness, as the S&P 500 benchmark declined by 0.6%, and the Dow Jones slipped by 0.3%, while the VIX experienced a brief surge of over 10%. This downturn resulted from revised interest rate projections in both the US and the UK, driven by December's robust US retail sales figures and slightly higher-than-expected UK inflation data.

Australian employment declined by 65,100 in December, contrary to the expected creation of 17,600 jobs, while the unemployment rate remained stable at 3.9%. This data holds significance as it impacts the Reserve Bank's decision in February, with the central bank seeking a job market loosening to address inflation concerns, and traders adjusting their rate cut expectations based on recent economic data from the US and the UK, with a focus on the upcoming quarterly inflation report on January 31.

The SPI futures are pointing to a fall of 47 points.

Best and worst performers

All sectors are in the red. The sector with the fewest losses is Financials, down 0.25 per cent. The worst-performing sector is REITs, down 1.63 per cent.

The best-performing large cap is Infratil (ASX:IFT), trading 2.35 per cent higher at $9.58. It is followed by shares in Seven Group Holdings (ASX:SVW) and Meridian Energy (ASX:MEZ).

The worst-performing large cap is Ampol (ASX:ALD), trading 2.89 per cent lower at $34.93. It is followed by shares in IGO (ASX:IGO) and REA Group (ASX:REA).

Company news

Gateway Mining (ASX:GML) has intersected a significant new zone of bedrock gold mineralisation in first-pass Reverse Circulation (RC) drilling testing at the newly defined Duplex target, within the Montague Gold Project in WA. In response, Gateway’s Managing Director, Mr Mark Cossom, said, “this is a completely new style of mineralisation to anything we’ve seen before at Montague – validating our systematic approach to unlock the full value, through new discoveries, of what we believe is a major gold mineralised system.” Shares are trading 23.81 per cent higher at 2.6 cents.

Sabre Resources (ASX:SBR) is set to commence a multi-phase exploration program at its Dingo Project in the Northern Territory to follow up on high-grade uranium results, identified in previous drilling at the Eclipse 1 Prospect. In response, Sabre Resources CEO Jon Dugdale commented, “Uranium exploration in the Ngalia Basin is actively encouraged by the Northern Territory Government and its location in an arid area 300km northwest of Alice Springs makes it one of Australia’s best regions for uranium development.” Shares are trading 24.14 per cent higher at 3.6 cents.

Ionic Rare Earths (ASX:IXR) has announced that the Ugandan Minister of Energy and Mineral Development, has signed and issued Large Scale Mining Licence for the Makuutu Heavy Rare Earths Project. This brings on further supply chain and off-taker engagement, and positions Makuutu for targeted Final Investment Decision later in 2024 and first production in 2026. Shares are trading 6.82 per cent higher at 2.35 cents.

Commodities and the dollar

Gold is trading at US$2010.60 an ounce.

Iron ore is 1.4 per cent lower at US$127.65 a tonne.

Iron ore futures are pointing to a 0.9 per cent fall.

One Australian dollar is buying 65.40 US cents.

Peter Milios

Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

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