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Wall Street ended a 5-week winning streak across the key indices on Friday with the Dow Jones retreating more than 100 points as investors reassessed the outlook for the Fed to cut rates with anticipation rate cuts will come later than first expected. The S&P500 fell almost half a percent on Friday while the tech-heavy Nasdaq declined 0.82%. For the week, the key indices each posted their first loss in 5-weeks with the Dow losing 0.11%, the S&P500 shedding 0.42% and the Nasdaq declining 1.34%.

Stronger-than-expected Producer Price Index data drove investor concerns for later rate cuts as the PPI reading for January showed wholesale inflation rose 0.3% where economists were polling a 0.1% gain.

The Ten-year Treasury Yield also rose to 4.3% on Friday which added to investor’s hitting the sell button on equities in favour of safer returns through government bonds.

Over in Europe it was a different story on Friday with the key markets closing the last trading session of the week higher prompted by strong economic data indicating resilience in some markets despite the high interest rate environment. The STOXX600 rose 0.6% on Friday, Germany’s DAX added 0.42%, the French CAC closed 0.32% higher and, in the UK, the FTSE100 had the biggest gain of 1.5%. The strength in the UK on Friday was driven by retail sales coming in at month-on-month growth of 3.4% for January which is more than double what economists were expecting and follows a record decline in the December sales reading.

Across the Asia markets on Friday, Hong Kong’s Hang Seng led the gains across the Asia markets on Friday with the key index rising 2.41% while mainland Chinese markets remained closed for the Lunar New Year holidays. Japan’s Nikkei hit a fresh 34-year high, and investors in the region awaited the release of Singapore’s 2024 budget which came out later on Friday.

Locally on Friday, the ASX200 rose 0.7% and climbed 0.2% for the week, boosted by Australia’s resources sector as weakness in the US dollar fuelled a rally for gold, oil, and iron ore prices.

GQG Partners was one of the top performing stocks locally on Friday after the boutique investment manager reported it has already raised a further US$2.9bn in the first 6-weeks of 2024, while QBE and IAG insurers both fell out of favour with investors on Friday after missing analysts’ expectations in the first half.

What to watch today:

• Ahead of the first session of the new trading week, the SPI futures are expecting the local market to open Monday’s session up 0.11% tracking gains on Wall Street from Friday.
• On the commodities front this morning, oil is trading 1.5% higher at US$79.19/barrel, gold is up 0.45% at US$2013/ounce and iron ore is flat at US$128/tonne.
• AU$1.00 is buying US$0.65 cents, 98.08 Japanese Yen, 51.84 British Pence and NZ$1.07 cents.

Trading Ideas:

• Bell Potter has increased the rating on Whitehaven Coal (ASX:WHC) from a sell to a hold rating and maintained the 12-month price target of $7.65/share following the release of the company’s first half results including most metrics meeting Bell Potter estimates and the company also announced a surprise 7cps dividend. The company will also soon become the operator of large Queensland met coal assets, positively shifting the company’s commodity exposure and risk profile.
• And Trading Central has identified a bullish signal on Pilbara Minerals (ASX:PLS) following the formation of a pattern over a period of 21-days which is roughly the same amount of time the share price may rise from the close of $3.71 to the range of $4.06 to $4.14 according to standard principles of technical analysis.