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ASX Rallies Following Yesterday's Headline CPI Miss

By William OLoughlinMarket OverviewJul 27, 2017 10:17
au.investing.com/analysis/asx-rallies-following-yesterday's-headline-cpi-miss-200196084
ASX Rallies Following Yesterday's Headline CPI Miss
By William OLoughlin   |  Jul 27, 2017 10:17
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Originally published by Rivkin Securities

The S&P/ASX 200 didn’t need the softer headline CPI read yesterday in order to rally, traders came strongly out of the blocks at 10am and kept the market in a tight range throughout the entire session – there was no backing off on the close and the index finished at 5776, 50 points higher than where it started.

The AUD/USD initially eased back to levels around US$0.7880 but didn’t stay there for long, trading above US$0.80 cents by the close. This is the strongest the Australian dollar has been against the US dollar since May 2015, a little over 2 years. Despite some headlines recently, the Aussie actually hasn’t done anything too outrageous over the past 12 months – it is at the top of an 8c range, which is a couple of cents tighter than the 12 months previous.

Australia’s biggest banks and diversified miners were responsible for the big moves in the market yesterday. As I’ve been harping on about, strengthening Chinese commodity demand and the sustained weakness of the US dollar are good things for our miners, our market and our government revenue outlook – so long as these themes remains in play, we’ll see more of the positives manifest in the earnings of the miners, so traders are slowly closing in on that. From a distance, I see the continued upside in the materials stocks that dragged our market higher yesterday (BHP (AX:BHP), Rio (AX:RIO), South32 (AX:S32) and Woodside Petroleum (AX:WPL)).

With the S&P 500 closing just 0.7 of a point higher (+0.03%) on Wednesday, and with ASX SPI200 futures flat in the overnight session, we expect a quiet open to trading today.

It’ll be a US-dollar-centric day for data releases, all AEST:

  • Thursday 04:00 US Federal Open Market Committee rate decision
  • Thursday 22:30 US Durable Goods Orders
  • Thursday 22:30 US Advanced Goods Trade Balance
  • Friday 00:30 Senate confirmation hearing for Randal Quarles (Trump pick for high ranking Fed job)
ASX Rallies Following Yesterday's Headline CPI Miss
 

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ASX Rallies Following Yesterday's Headline CPI Miss

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