The Australian Securities Exchange (ASX) has followed Wall Street lower this morning (26 February) as US data released overnight points to “stagflation”, according to the ANZ.
Stagflation is the combination of high inflation, stagnant economic growth, and elevated unemployment.
February witnessed its largest monthly decline – and third straight drop – in consumer confidence since August 2021, according to data released by The Conference Board.
At the same time, average 12-month inflation expectations rose 0.8 percentage points to 6%, which ANZ says reflects the recent rise in prices of staples such as eggs coupled with the expected impact of tariffs.
US President Donald Trump is now also considering potential tariffs on copper imports into the US and has commenced a national security investigation under Section 232 of the Trade Expansion Act of 1962 — the same law he relied on to introduce 25% tariffs on steel and aluminium.
ANZ Economist Sophia Angala says growth concerns dominate the near-term outlook.
“The Conference Board consumer survey data follows the weak services PMI and a fall in University of Michigan consumer sentiment last week, and underscore rising concerns about weak growth coupled with a surge in inflation expectations,” she says.
“Inflation expectations are a closely watched metric at the Fed and a de-anchoring of inflation expectations for an extended period would risk undoing the progress on disinflation.”
This saw US markets soften overnight and the S&P/ASX 200 start the session today down 29.9 points, or 0.36%, at 8,222 points by 10.30am AEDT.
The index has lost 2.34% in the last five days, but is virtually unchanged over the last year to date.
Sectors were mixed in early trade, with only four of the 11 escaping the early downward pull. Utilities dipped 0.24%, materials edged back 0.12% and industrials moved down 0.08%. Energy was only just in the green with a 0.01% tick up.
Mining services firm Worley (ASX:WOR) witnessed some good gains at the opening bell after being named lead integration delivery partner for the Rio Tinto (ASX:RIO) backed Rincon Project in Argentina.
The company will deliver the lithium carbonate plant, coordinate subcontractors including technology providers, construction contractors, and industrial relations support.
The news sent Worley up 9.42% to $15.34.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & iStock
