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FIVE at FIVE AU: ASX marginally higher as US inflation heats up yet again

Published 19/02/2024, 04:04 pm
Updated 19/02/2024, 04:30 pm
© Reuters.  FIVE at FIVE AU: ASX marginally higher as US inflation heats up yet again

The ASX is up today, gaining 8.90 points or 0.12% to 7,667.20. The top performing stocks were Sayona Mining and the A2 Milk Company Ltd, up 16.36% and 11.39% respectively.

Over the last five days, the index has gained 0.29% and is currently 0.47% off its 52-week high.

There was a fair bit of green lighting up the sector board.

The Materials (0.50%), Financials (0.73%), Communications Services (0.74%), Industrials (0.36%), Consumer Discretionary (0.42%) and Consumer Staples (0.15%) sectors were all up just after lunch, with one sector in particular dragging the exchange in the other direction – Real Estate was down a substantial 2.48%.

Inflation rears its head in US again

Over in the US, there has been some consternation about still-untamed inflation, with US equities ending last week in retreat after the Producer Price Index (PPI) for January rose by 0.3%, the largest upward move in five months and more than the forecasted 0.1%).

“Core PPI, which excludes food and energy and has a strong feed through into the Fed’s preferred measure of inflation Core PCE, surged by 0.5%, well above market expectations of 0.1%,” said IG’s Tony Sycamore.

“A core PCE print of 0.4% MoM in January (to be released on March 1), which would see the three-month annualised Core PCE inflation rate surge from 1.7% in December to ~2.7%, now appears likely.

“This week will see the Q4 earnings season continue with reports scheduled from companies including Walmart (NYSE:WMT), Home Depot (NYSE:HD), Nvidia, Berkshire Hathaway (NYSE:BRKa) and Warner Bros.

“The key economic events on the calendar include the FOMC meeting minutes on Thursday morning, flash PMIs and Fed Speak from Bostic, Bowman, Harker, Cook, Kashkari and Waller.”

On the horizon for US investors is the release of the FOMC meeting minutes, due Thursday.

“At its meeting in January, the Fed maintained its target rate for the Fed Funds at 5.25%-5.50% for a fourth consecutive meeting,” Sycamore continued.

The Fed removed its out-of-date tightening bias and said rate cuts were coming but not imminent:

“‘The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.

“The minutes will be closely scrutinised for the Fed's plans around its balance sheet, how it views the run of hotter-than-expected US data and risks to the global economy and any clues about when the Fed expects to start cutting rates.”

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