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The US market closed lower on Wednesday despite the Fed announcing a 50-basis point rate cut in the first rate cut of the interest rate cycle as inflation continues to ease in the world’s largest economy. The Dow Jones fell 0.25% on Wednesday while the S&P500 lost 0.35 and the tech-heavy Nasdaq ended the day down 0.31%. Investors likely responded to the 50-basis point rate cut with concerns over the Fed potentially cutting aggressively in fear of further weakening to the US economy in the months to come.

Over in Europe on Wednesday, markets closed lower as investors assessed key economic data released in the region. The STOXX 600 fell 0.5%, Germany’s DAX lost 0.08%, the French CAC fell 0.57% and, in the UK, the FTSE100 ended the day down 0.68%. UK inflation data for August was released yesterday with a flat reading on July of 2.2%, which comes ahead of the Bank of England’s rate decision on Thursday UK time where it is expected the BoE will maintain the current cash rate of 5% for another period.

The Asia region closed mostly higher on Wednesday as investors in the region digested key economic data including Japan’s exports and imports rising 5.6% and 2.3% respectively in August and the country’s trade deficit easing over the month. Japan’s Nikkei rose 0.5% on Wednesday while China’s CSI index rose 0.37% and South Korea and Hong Kong’s markets were closed for a holiday.

Locally on Wednesday, the ASX 200 ended the midweek session flat after setting a fresh record close on Tuesday as a decline in the price of iron ore hit the big miners.

Underwhelming economic data out of China over the weekend placed further pressure on the iron ore price as the world’s second largest economy continues its struggle to regain economic expansion and stability post pandemic.

Rio Tinto and BHP each fell just shy of 1%, while FMG ended the day down 0.3%.

Harvey Norman shares closed flat on Wednesday despite the homewares retailer being hit with a class action accusing the retailer of allegedly selling hundreds of millions of dollars of unnecessary and worthless extended warranties. Harvey Norman said it complied with all relevant laws.

Biotech company Imugene received a long-awaited Orphan Drug Designation from the FDA for its CF33-hNIS vaxinia to treat cholangiocarcinoma (COLAN-GIO-CARCINOMA) which is a rare form of bile tract cancer. Shares in the company rose 6.25% yesterday.

What to watch today:

• All eyes locally today will be on Australia’s latest jobs data which is out this morning with the market expecting the unemployment rate to remain flat at 4.2% while it is forecast that the employment change is expected to drop to an increase of just 28,000 in August from the high jump of 58.2k reported in July.
• Ahead of Thursday’s trading session the SPI futures are anticipating the ASX to open the new trading day down half a percent tracking Wall Street’s loss overnight.
• On the commodities front this morning oil is trading 1.66% lower at US$70/barrel, gold is down 0.6% at US$2558.84/ounce, and iron ore is up 0.04% at US$91.98/tonne.
• The Aussie dollar has strengthened overnight to buy 67.65 US cents, 96.13 Japanese Yen, 51.23 British Pence and 1 New Zealand dollar and 9 cents.

Trading Ideas:

• Bell Potter has initiated coverage of Genesis Minerals (ASX:GMD) with a buy rating and a 12-month price target of $2.55/share. Genesis Minerals is a Western Australian gold production and development company focused on the Leonora District with two gold processing plants and four mining centres under the company’s belt as well as two critical deposits boasting high grade gold. The company’s value is in its 10-year long-term growth plan and the restart of the Laverton plant in December 2024.
• Trading Central has identified a bullish signal on Adairs (ASX:ADH) following the formation of a pattern over a period of 17-days which is roughly the same amount of time the share price may rise from the close of $1.83 to the range of $2.30 to $2.40 according to standard principles of technical analysis.