APAC Morning Wrap: Dow extends losses amid hotter-than-expected inflation, ARM set to debut

US stocks ended mixed, with the Dow in the red, while the S&P 500 and Nasdaq rose after slightly higher-than-expected August CPI data. US headline inflation rose 3.7% from a year ago and 0.6% from last month, above estimates of 3.6% and 0.6%, respectively. Core CPI excluding food and energy rose 4.3% year-on-year and 0.3% month-on-month, compared with expectations of 4.3% and 0.2%. These data could lead to another Fed rate hike in November after a possible pause in September. Stock markets were relatively calm as inflation was largely in line with expectations and US government bond yields fell slightly after the data.

Technology stocks were once again the winners, while the energy sector lost momentum. UK-based software company ARM, owned by SoftBank, will debut tonight when US markets open in what will be the biggest IPO of the year. Investors will be waiting for more influential economic data from the US tonight, including the producer price index, retail sales and jobless claims. The European Central Bank will also make an exchange rate decision later today, with a pause expected.

Asian markets were mostly lower on Wednesday but will open higher. Australian employment data will be the focus of the Asian session, with the labor market expected to remain firm to support further RBA rate hikes. Nikkei 225 futures were up 0.53%, ASX 200 futures were down 0.06% and Hang Seng futures were up 0.02%.

Price drivers:

  • 6 of 11 sectors finished higher in the S&P 500, with utilities and consumer discretionary leading gains of 1.2% and 0.9%, respectively. Real estate was the biggest laggard, down 1.03%, as expectations for a Fed rate hike strengthened. Energy stocks also underperformed, falling 0.76% as the sector rotated.
  • Arm’s IPO price is US$51 per share, which is above the expected price range of US$47 to US$51, giving it a market valuation of about US$55.5 billion. The debut is set to be the biggest tech IPO in US markets this year, joining the global AI race to direct investment funds.
  • Apple shares fell for a second straight trading day as China expanded its ban on iPhones in government departments and companies. China is the largest market for Apple, accounting for more than 20%. The restriction could potentially significantly reduce the iPhone’s market share.
  • Google plans to cut hundreds more jobs in the next few quarters due to a hiring spree. Staff involved in the downsizing will receive emails from Wednesday. Google cut 12,000 jobs, or 6% of its workforce, in January.
  • Bitcoin Consolidates Above 26,000 for Second Day in a Row, Highest Since August 31. The bounce may have been caused by short covering following a broad sell-off in cryptocurrencies amid fears of an FTX liquidation on Monday

ASX and NZX announcements/news:

Today’s agenda:

  • Inflation expectations in Australia in August
  • Change of employment for August
  • ECB rate decision
  • US PPI for August

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