The Australian sharemarket is set to open slightly higher, with futures at 7.40am AEDT pointing to a rise of 17 points, or 0.2 per cent. The ASX lost 29.1 points, or 0.4 per cent, on Thursday and the Australian dollar was fetching 67.05 US cents at7.45am AEDT, down 0.4 per cent.
Wall Street’s weak start to 2024 carried into a third day, and stocks finished mixed on Thursday following reports showing the US job market remains solid, though maybe a touch too strong.
The S&P 500 slipped 16.13, or 0.3 per cent, to 4688.68 and is on track for its first losing week in the last 10. The Dow Jones Industrial Average eked out a gain of 10.15 points, or less than 0.1 per cent, to 37,440.34, and the Nasdaq composite fell 81.91, or 0.6 per cent, to 14,510.30.
Walgreens Boots Alliance sank 5.1 per cent after it nearly halved its dividend so it could hold on to more cash. That helped overshadow gains for airlines and cruise-ship operators, which recovered some of their sharp losses from earlier in the week. Carnival steamed 3.1 per cent higher, and United Airlines got a 2.4 per cent lift.
US stocks have broadly regressed this week after rallying nine straight weeks into the end of last year. Critics said the market was due for at least a breather following its big run, which fed on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates sharply this year.
Rate cuts give a boost to prices for stocks and other investments, while also relaxing the pressure on the economy and financial system. Treasury yields in the bond market have already eased since autumn on hopes for such cuts, releasing pressure on the stock market.
But Treasury yields rose Thursday following a couple reports on the job market that were stronger than expected. The economy is in a delicate phase where investors want it to remain solid, but not too hot.
Too much strength in the job market could prod the Federal Reserve to keep interest rates high because it could keep upward pressure on inflation.
A healthy job market is of course good for workers and stamps out worries about an imminent recession. But too much strength could prod the Federal Reserve to keep interest rates high because it could keep upward pressure on inflation. And the Fed has already hiked its main interest rate to the highest level since 2001.
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