ASX set to slide as Wall Street scuffles on inflation data

The moves follow a shaky immediate reaction across financial markets to the inflation report, where bond yields and stock prices swung back and forth several times. The report said US consumers paid prices last month that were 3.7 per cent higher than a year earlier, up from July’s inflation rate of 3.2 per cent.

But she also said expectations among traders on Wall Street for cuts to interest rates next year may be too aggressive. Such cuts can act like steroids for stocks and other investments, but inflation is still above the Fed’s target of 2 per cent. American Airlines cut its forecast for profits during the summer because fuel costs are running higher than it expected. It also had to pay about $US230 million in retroactive pay to pilots after they ratified a new labor contract. Its stock fell 5.4 per cent.

On the winning end of Wall Street were high-growth stocks that could be big beneficiaries if the Fed is indeed done hiking interest rates. High rates hurt all kinds of investments, but they often most hurt technology companies and others promising big growth far out in the future.

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