The S&P/ASX 200 Index (ASX: XJO) capped off a perfect run last week, finishing every trading day in the green.
Australia's benchmark index edged up 0.1% on Monday, gained 0.5% on Tuesday, and tacked on another 0.3% on Wednesday.
Things really got rolling on Thursday, which saw the ASX 200 finish the day up 1.7%. And those good times rolled on into Friday, with the index of top 200 Aussie stocks gaining 0.9%, leading to a 3.4% weekly gain.
So, why are shares under selling pressure today?
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What's pressuring the ASX 200 on Monday?
While some stocks are flying higher today, investor jitters see the ASX 200 down 0.034% in Monday trade, having recovered from earlier losses of 0.5%.
The broader selling pressure looks to be driven by some backpedalling from US Federal Reserve officials over the likelihood of interest rate cuts in 2024.
As we reported here on Thursday, investor sentiment was stoked across much of the world after the Federal Open Market Committee (FOMC) unanimously voted to keep the benchmark US interest rate in the target range of 5.25% to 5.50% overnight on Wednesday.
While that move was widely expected, language accompanying the announcement suggesting that the Fed could well be looking at several rate cuts in 2024 was not. And the prospect of reduced rates from the world's top central bank sent the ASX 200 soaring on Thursday and Friday.
However, several Fed officials have since been watering down hopes of an imminent 2024 rate cut, which looks to be taking some of the steam out of the stock market rally.
Federal Reserve Bank of Chicago President Austan Goolsbee cautioned that the Fed's battle to contain inflation is ongoing.
According to Goolsbee (quoted by Bloomberg), "We've made a lot of progress in 2023, but I still caution everyone, it's not done. And so the data is going to drive what's going to happen to rates."
And ASX 200 investors shouldn't be counting their interest rate cut chickens yet.
Noting the Fed's 2% inflation target range, Goolsbee added:
We've got to get inflation down to target. Until we're convinced that we're on path to that, it's an overstatement to be counting the chickens.
New York Fed President John Williams also noted that investor exuberance about rate cuts from the Fed in March is "premature".
"We aren't really talking about rate cuts," he said.
