The lowdown

Capital.com senior analyst Kyle Rodda said markets treaded cautiously ahead of the release of US inflation data, with investors shifting out of equities and the US dollar.

“Last night’s tumble in US banks bled into the ASX200, with the financial sector a meaningful drag on the market. Energy stocks were also a weight after the overnight drop in crude prices driven by fears about the global growth outlook,” Rodda wrote in a note to clients.

“Materials were a surprising bright light thanks to a surge in lithium stocks, which rallied following news a major Chinese battery maker would be shutting down one of its mines. The sector remains well-off from its boom-time highs.”

Market operator ASX closed 0.2 per cent lower after announcing its chair Damian Roche would retire from the board next month, to be replaced by former banker David Clarke. Roche, who had previously flagged this would be his final term, is leaving as the ASX deals with the fallout from repeated delays and the eventual abandonment of a major technology upgrade known as the CHESS replacement project.

The corporate watchdog said last month it would take legal action against ASX over the issue.

Citi research analyst Siraj Ahmed said data-centre operator NextDC’s slump came after it had announced “another surprise equity raise” for the second time in a row without a contract announcement.

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“One of the criticisms for [NextDC] from investors is its capital allocation, specifically outside of Sydney, with the company having developed and fitted out some sites well ahead of contract announcements,” he said in a note.

On Wall Street overnight, the S&P 500 rose 0.4 per cent to pull within 3 per cent of its record set in July. It flipped between small gains and losses throughout the trading session, but the moves were nothing like its recent careens, driven by worries about the slowing US economy and whether forthcoming cuts to interest rates will keep it out of a possible recession.

The Dow Jones fell 92 points, or 0.2 per cent, and the Nasdaq composite rose 0.8 per cent.

Banks weighed on the US market following discouraging comments from several executives at an industry conference.

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JPMorgan Chase fell 5.2 per cent after its chief operating officer said analysts’ expectations for an underlying measure of its profit may be “too high”. Goldman Sachs dropped 4.4 per cent after its CEO said its trading revenue for the current quarter was trending down. And Ally Financial sank 17.6 per cent after its chief financial officer warned that borrowers are “struggling with high inflation and cost of living and now, more recently, a weakening employment picture”.

Stocks of energy producers were also weak after oil prices fell. A barrel of Brent crude, the international standard, is near its lowest price since 2021, and it’s been sinking amid worries about how much fuel a fragile global economy will burn. That helped drag ExxonMobil down 3.6 per cent and Chevron down 1.5 per cent.

The Fed is turning its focus away from stifling high inflation and towards protecting the economy. The debate on Wall Street is now focused on how much the Fed will cut the federal funds rate, which has been sitting at a two-decade high, and whether the easing will ultimately be too late to prevent a recession.

Reports coming this week on inflation could influence the size of the Fed’s upcoming cuts. The worst case for the Fed would be if inflation were to re-accelerate when the job market is weakening, because helping either of those would require opposing moves.

On Wednesday, though, economists expect the latest report on inflation to show prices for US consumers were 2.6 per cent higher in August than a year earlier. That would be a slowdown from July’s inflation rate of 2.9 per cent.

Tweet of the day

Quote of the day

“Meta must think we’re mugs if they expect us to believe someone uploading a family photo to Facebook in 2007 consented to it being used 17 years later to train AI technology that didn’t even exist at the time.”

That’s Labor senator Tony Sheldon, who chaired a Senate inquiry this morning grilling the executives of Facebook’s parent company, Meta, about how Australian data is being used to train the company’s artificial intelligence models – and got Meta’s global privacy director Melinda Claybaugh to admit Australian users can’t opt out.

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Industry super fund HESTA will leverage its voting power to force some of Australia’s largest publicly listed companies to set gender targets across the entire organisation – not just at the board and executive level – to address the gender pay gap.

The $87-billion fund has written to the chairs and chief executives of ASX 300 companies it invests in to commit to ensuring 40 per cent of its staff are women, after the Workplace Gender Equality Agency (WEGA) released data this year showing the gender pay gap was more than 20 per cent in the private sector.

With AP

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