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Wall Street closed lower on Wednesday on the back of disappointing earnings results and rising treasury yields. The S&P500 fell 1.43% on Wednesday, while the Nasdaq tumbled 2.43% and the Dow Jones lost 0.32%. Google’s parent company, Alphabet, tumbled more than 9% after the tech giant posted quarterly results that beat expectations for earnings and revenue growth but missed expectations for the company’s cloud business. The benchmark on the 10-year treasury yield climbed nearly 11 basis points to hit 4.95%.
Over in Europe, markets closed mixed as investors reacted to the release of corporate earnings results. The STOXX600 closed flat as mining stocks rose almost 1% while retail stocks fell 1.3%.
Kering shares fell 3% on Wednesday after the French luxury group reported a 9% decline in sales for the third quarter.
Germany’s Deutsche Bank rose 8% yesterday after reporting a third-quarter net profit of 1.031bn euros, which beat analysts’ expectations.
The local market closed relatively flat on Wednesday to end the day down just 0.04% or 2.6 points as investors weighed a Tuesday rally on Wall Street against hotter-than-expected inflation reading for Australia in the September quarter.
Australia’s CPI data released yesterday showed the country’s headline inflation rose 1.2% in the September quarter to an annual rate of 5.4%, below the 6% recorded in Q2 but slightly above economists’ expectations of 5.3%. The key driver of inflation rising 1.2% in the September quarter were unsurprisingly fuel prices up 7.2%, rental prices up 2.2% and electricity prices up 4.2%.
Prior to the release of the latest CPI reading, three of the big four Aussie banks believed the nation’s cash rate had peaked at 4.1%, and after the release of the inflation reading coming in hotter-than-expected, NAB, CBA and ANZ now believe another interest rate hike is in-store for Aussies set to be announced on Melbourne Cup Day. The move in bank expectations also follows Michele Bullock’s first speech as governor of the RBA on Tuesday night where she said the board ‘will not hesitate to raise the cash rate further if there is a material upward revision in the outlook for inflation’.
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