Miners, banks boost ASX; Star rises

Overnight in the US, stocks got a boost from a report showing inflation at the US wholesale level wasn’t as high last month as economists expected. It’s an encouraging signal ahead of a report coming Wednesday, which will show how much inflation US consumers faced at gasoline pumps, grocery registers and auto lots in December.

Stubbornly high readings on inflation and a run of better-than-expected updates on the US economy have sent Wall Street into a weeks-long rut, pulling it further from the dozens of all-time highs set last year. The fear is that all the strong data will convince the Federal Reserve to deliver less relief this year through lower interest rates.

The Fed has already hinted it’s likely to cut rates just two times in 2025, down from an earlier projection of four. Speculation is growing about whether the Fed may cut rates zero times this year.

Such questions have sent Treasury yields sharply higher in the bond market, which cranks up the pressure on the stock market. Yields slowed their ascent following the update on wholesale inflation.

The yield on the 10-year Treasury held at 4.78 per cent, where it was late Monday. It was below 3.65 per cent in September.The two-year Treasury yield, which more closely tracks expectations for Fed action, eased to 4.36 per cent from 4.39 per cent.

On Wall Street, KB Home rose 4.8 per cent after delivering a better profit for its latest quarter than analysts expected. The rise in Treasury yields has made mortgages more expensive, but CEO Jeffrey Mezger said buyers nevertheless “continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.”

Mezger said faster build times helped the company deliver more homes in the three months through November.

H&E Equipment Services more than doubled to top $US90 after United Rentals said it will buy its smaller rival for $US92 per share in cash. The deal values H&E, which rents aerial work platforms, earthmoving equipment and other products, at $US4.8 billion, including roughly $US1.4 billion of net debt.

Indexes drifted between gains and losses through the day in large part due to drops for several Big Tech stocks. Nvidia fell 1.1 per cent and was the second-heaviest weight on the S&P 500.

The only stock to drag more on the market was Eli Lilly, which fell 6.6 per cent after saying it expects to report weaker revenue for the last three months of 2024 than previously forecast.

Several of the nation’s biggest financial companies will report their latest results on Wednesday, including JPMorgan Chase and Wells Fargo, as earnings reporting season gears up. Such reports are always under the spotlight, but companies may be under more pressure to impress this time around.

If Treasury yields continue to rise, either stock prices need to fall or companies need to produce bigger profit growth to make up for it.

In stock markets abroad, indexes were higher across much of Europe and Asia with a few exceptions.

Crude oil prices fell to give back some of their strong gains in recent weeks, which had also been cranking up the pressure on inflation.

Benchmark US crude eased 1.7 per cent to $US77.50 per barrel. Brent crude, the international standard, fell 1.3 per cent to $US79.92 per barrel.

With AP

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