Wall Street flounders and ASX falls as markets reflect on inflation ‘victory’

Australian stocks falter as global markets wonder if the worst rate hikes are over.

As of 11 a.m. AEST, the ASX 200 was down 0.7%.

At that time, there were no major movers. The biggest gain was 1.8 by Incitec.

Meanwhile, the biggest losers were Imugene (-5.2pc) and Novonix (-4.9pc).

The results released today include major insurer IAG.

He announced that his net profit was up $347 million. This comes after losing more than $400 million in the previous fiscal year.

Its profitability is up despite its overall revenue down $548 million from the previous year to $18.34 billion.

The insurer said its growth “primarily reflected rate increases to offset inflationary pressures in the supply chain and natural perils.”

It said its insurance margins were 7.4% lower than expected after having to pay a significant amount of premiums for natural disasters.

This year has seen huge amounts of claims related to East Coast flooding and storms. IAG itself was hit by over $1 billion.

IAG had gained 1.2% in the morning.

It distributes a dividend of 5 cents.

Investors are not buying inflation ‘kool aid’

The ASX is trading after Wall Street had mixed results overnight.

The Dow Jones closed flat, the S&P500 closed down 0.1% and the tech-heavy Nasdaq was down 0.6%.

Wall Street surged the day before as US markets rose after the world’s largest economy released its latest inflation data.

The data showed that price increases were starting to subside, which could ease concerns about another sharp rate hike of up to 0.75% next month.

However, San Francisco Fed President Mary Daly said it was too early to “declare victory” on inflation despite the better numbers.

Ms Daly also said a 0.5% rate hike in September was currently her “baseline”, and that jobs and worker data to be released soon should also be taken into consideration.

Oil as people switch to expensive gas

Yields on 10-year US Treasuries rose slightly, indicating that markets are also continuing to bet on rate hikes.

City Index analyst Tony Sycamore said it looked like investors would still be betting on a U.S. rate hike of up to 0.75%.

“The interest rate market is clearly not drinking the same post-inflation kool aid that the equity market has slowed,” he said.

“The financial markets initially reacted positively to [US inflation] data which showed that US inflation is moderating, but gains later narrowed due to fears the market may have overreacted,” ANZ also noted.

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