Investing.com - The Australian Securities Exchange dipped 0.5% at Tuesday's open, mirroring losses in New York where stocks took a hit and bond yields saw a significant surge. This comes in the wake of Federal Reserve Chairman Jerome Powell's remarks, which poured cold water on hopes of an imminent rate cut.
In a Sunday evening TV interview, Powell made it clear that a rate cut was not on the horizon and that market expectations of up to six cuts by 2024 were overly ambitious. This led to a 14 basis point increase in the yield on the US 10-year note, bringing it to 4.16% by 4.04 pm New York time.
The Dow Jones Industrial Average was pulled down, in part, by McDonald’s Corporation (NYSE:MCD) shares which fell by 3.7%. The fast-food giant's fourth-quarter sales didn't live up to expectations, reflecting the impacts of the ongoing conflict in the Middle East.
Powell's comments coincided with a meeting of RBA policymakers on Monday afternoon to assess the current state of the economy and markets. The RBA board is scheduled to reconvene on Tuesday morning to consider a policy decision, the results of which will be released at 2.30 pm.
In addition to the policy decision, the central bank will release its latest Statement on Monetary Policy. This statement will feature a new format and chapter structure aimed at providing a clearer explanation of the bank's economic assessments and outlook.
Several companies including Virgin Money (LON:VM) UK PLC (LON:VMUK), Dexus Industria REIT Unit (ASX:DXI), Garda Diversified Property Fund (ASX:GDF), Newmark REIT Management Ltd Unit (ASX:NPR), Nick Scali Ltd (ASX:NCK), and Region Re Ltd Unit (ASX:RGN) are set to release their earnings.
ASX 200 Futures were down 24 points or 0.3% to 7563 around 8 am AEDT, and the Australian dollar dipped by 0.5% to 64.82 US cents. Bitcoin also saw a 1% decrease to $US42,409 as of 8.06am AEDT.
US interest rates are projected to stay high for an extended period as recent data shows the economy's strength entering 2024. The ISM services index rebounded to 53.4 in January from a 12-month low of 50.5 in December. However, it was the prices paid component that stole the spotlight.
In the US earnings flow, Caterpillar Inc (NYSE:CAT), one of the world's largest manufacturers of heavy machinery, dismissed concerns of a global economic slowdown after reporting higher fourth-quarter sales in its energy and transportation business.
Snap Inc (NYSE:SNAP) announced a workforce reduction of approximately 10% globally, joining a growing list of tech companies that have announced layoffs since the start of the year.