ASX 200: Trading week set to start with sharp fall

The ASX 200 is poised for a sharp fall on Monday morning, with futures pricing in a drop of 1.5 per cent ahead of a week headlined by economic growth figures and corporate earnings.

National accounts figures will be in focus as investors hunt for clues to the Reserve Bank’s interest rates trajectory. Picture: Jenny Evans/Getty Images

The local sharemarket is poised for a sharp fall on Monday morning, with futures pricing in a drop of 1.5 per cent ahead of a week headlined by economic growth figures and corporate earnings reports.

At the close of offshore trading, S&P/ASX200 futures were suggesting a fall of 1.5 per cent to 7198 points, after elevated US inflation figures hit Wall Street sentiment.

Locally, however, national accounts data due on Wednesday will be pivotal for the market’s outlook.

Economists surveyed by Bloomberg are tipping seasonally adjusted GDP growth of 2.7 per cent in the year to December, sharply down from 5.9 per cent in the September quarter.

Price and wages figures will garner more focus than usual as investors hunt for clues to the Reserve Bank’s interest rates trajectory, NAB chief economist Alan Oster said.

“This release is unlikely to impact the path of monetary policy in the near term with the RBA having already signalled further increases in coming months. Indeed, the national accounts prices and wages measures will likely confirm the broad-based inflationary pressure in the economy,” Mr Oster said.

“That said, slowing growth will likely be the first signal the economy is cooling in response to rate rises alongside the moderation in global inflation. Therefore, activity partials – particularly for consumer spending – will be important in assessing the flow through in policy over coming months.”

On Wall Street, stocks finished an ugly session decisively lower on Friday after another round of hot inflation data exacerbated worries over monetary policy.

The Federal Reserve’s preferred gauge of inflation, the personal consumption expenditures price index, rose 5.4 per cent last month from January 2022.

The report is the latest indicator to suggest the central bank still faces significant challenges in addressing sticky pricing pressure.

The yield of the 10-year US Treasury note climbed closer to 4 per cent in a sign of rising expectations for more Fed interest rate hikes.

“It’s hard to suggest that this data is not concerning,” Tom Cahill, Ventura Wealth Management partner said, questioning whether the Fed’s actions will “drive the economy into recession”.

The broad-based S&P 500 finished at 3970.04, down 1.1 per cent for the day and 2.7 per cent for the week.

The Dow Jones Industrial Average dropped 1.0 per cent to 32,816.92, while the tech-rich Nasdaq Composite Index slumped 1.7 per cent to 11,394.94.

Among individual companies, Boeing slumped nearly 5 per cent after it again suspended deliveries of the 787 Dreamliner. The latest pause is a disappointment for the aerospace giant after it resumed deliveries of the jet in August, following a halt of more than a year.

Locally on Monday, as corporate earnings season wraps up, the biggest names to report include Woodside, Lynas, Appen, Liberty Financial Group and Kogan.

Companies including AdBri, Nickel Industries, Cooper Energy, PointsBet Holdings and Mayne Pharma will reveal their latest earnings results on Tuesday.

Additional reporting: AFP