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Wall St closed sharply lower on Friday as a hot job report out in the US dampened expectations for further interest rate cuts out of the Fed this year. The Dow Jones fell 1.63%, the S&P500 lost 1.54% and the tech-heavy Nasdaq ended the day down 1.63%. In December US payrolls grew by 256,000 which was well above the 155,000 economists were expecting. While this strong jobs report is good to signal a robust economy, it is not good for market sentiment on the rate cut front as a strong labour market leads to higher income and consumer spending which in-turn drives inflation.

The negative market sentiment flowed into the European region on Friday with markets in Europe also closing the day lower. The STOXX 600 fell 0.83%, Germany’s DAX lost 0.5%, the French CAC slid 0.79% and, in the UK, the FTSE100 ended the day down 0.86%. Eurozone bond yields also rose on Friday which pressured equities in the region.

Across the Asia region on Friday, markets mostly fell as real household spending in Japan declined 0.4% YoY in November while average real household income rose 0.7% in the same period. Japan’s Nikkei fell 1.05%, China’s CSI index lost 1.25%, Hong Kong’s Hang Seng fell 0.95% and South Korea’s Kospi Index ended the day down 0.24%.

Locally on Friday the ASX200 fell 0.42% as all sectors aside from materials stocks ended the day in the red, led by financials stocks declining 1.17%. The miners had a much-needed relief rally following days of depreciation on the back of a rise in the price of iron ore, while the banks took the biggest hit on broker downgrades within the sector. Star Entertainment Group fell a further 15.8% on Friday, extending heavy losses into a third session as investor concerns grow over the future of the embattled casino operator.

Insignia Financial on the other hand rallied over 2% on reports a 3rd bidder, Brookfield, is weighing up a bid for the superannuation and wealth giant.

What to watch today:

• Ahead of the first trading session of the new week the SPI futures are anticipating the ASX will open the day down 0.86% tracking Wall St losses on Friday.
• On the commodities front this morning, oil is trading 3.6% higher at US$76.57/barrel, gold is up 0.6% at US$2685/ounce, and iron ore is flat at US$98.09/tonne.
• The Aussie dollar has further weakened to buy 61.48 US cents, 97.00 Japanese Yen, 50.35 British Pence and 1 New Zealand dollar and 11 cents.

Trading Ideas:

• Bell Potter has downgraded the rating on Avita Medical (ASX:AVH) from a speculative buy to a speculative hold and have reduced the price target on the company from $4.60 to $3.50 after the company updated its guidance for FY24 with Q4 revenue now expected at US$18.4m which is well below the previously issued guidance range of US$22.3m to $24.3m amid a weaker response than expected from the recent launch of Recell Go.
• And Trading Central has identified a bullish signal on JB Hi-Fi (ASX:JBH) following the formation of a pattern over a period of 23-days which is roughly the same amount of time the share price may rise from the close of $96.40 to the range of $101.75 to $103.00 according to standard principles of technical analysis.