The local sharemarket looks set to open higher this morning ahead of the 11:30am AEST ABS release of its much-awaited inflation figures.
Economists expect inflation to rise by 3.8% in the year to June and rise 1% for the quarter. The CPI figure for the March quarter was 3.6%, less than half its peak and much lower than the 6.1%, but it is still well above the RBA target range of between 2-3%. And in the year to May, CPI came in at 4%, up from 3.6% in April.
The RBA has consistently said it would raise rates further if needed to bring down inflation.
If June quarter consumer prices are increasing at an even faster rate, the RBA board will be under pressure to lift interest rates at its meeting next week. Yet most economists and market analysts expect the RBA to keep rates on hold for a while before cutting rates from mid-2025.
The ASX SPI 200 Futures are trading up 29 points (0.37%) to 7,943 this morning, following a mixed performance on Wall Street overnight.
Overseas markets
US sharemarkets were mixed on Tuesday. The Dow Jones index rose by 203 points or 0.5% but the S&P 500 index slid 0.5% and the Nasdaq index shed 223 points or 1.3%.
The S&P 500 and Nasdaq indexes were both weighed down by weak chip and megacap shares.
- Microsoft (NASDAQ:MSFT) fell by 0.9% ahead of its quarterly results due after the closing bell.
- Chipmaker Nvidia tumbled 7%, dragging the Philadelphia semiconductor index down 3.9%.
- CrowdStrike shed 9.7% after a report that Delta Air Lines (NYSE:DAL) sought compensation from the cybersecurity firm and Microsoft for the global cyber outage earlier this month.
- Merck plunged 9.8% after the drugmaker cut its annual profit forecast.
- Procter & Gamble tumbled 4.8% after missing fourth-quarter sales expectations.
But the Dow Jones index managed modest gains.
- Goldman Sachs (NYSE:GS) was up 2.6%.
- Cybersecurity and cloud services company F5 surged 13% after forecasting fourth-quarter results above estimates.
US government bond yields drifted lower on Tuesday, as investors geared up for a US Federal Reserve decision that is expected to leave interest rates unchanged this week while flagging monetary policy easing at the September meeting.
Bonds also benefited from a safe haven rally after Israel carried out a strike in Lebanon targeting a Hezbollah commander. The US 10-year Treasury yield fell by 4 points to 4.14% and the US 2-year Treasury yield dipped 3 points to 4.36%.
European sharemarkets were choppy on Tuesday, with the eurozone bank index up 0.9%.
Germany's gross domestic product (GDP) unexpectedly contracted by 0.1% in the second quarter compared with the previous three-month period (survey: +0.1%).
- The continent-wide FTSEurofirst 300 index rose by 0.4%.
- In London, the UK FTSE 100 index dipped 0.2%, with industrial metal miners falling 1.9% as base metals prices fell on slowing global growth momentum and risk-off sentiment.
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0835 to US$1.0797 and was near US$1.0815 at the US close.
- The Aussie dollar dipped from US65.61 cents to US65.29 cents and was near US65.35 cents at the US close.
- The Japanese yen rose from 155.19 yen per US dollar to session highs near JPY152.75 at the US close.
Commodities
Global oil prices slid over 1% to a seven-week low on Tuesday on worries about weaker demand from China and a stronger US dollar, and concerns OPEC+ could boost supplies in the future.
- The Brent crude price fell by US$1.15 or 1.4% to US$78.63 a barrel.
- The US Nymex crude price shed US$1.08 or 1.4% to US$74.73 a barrel.
Base metal prices were mixed on Tuesday. Copper futures were unchanged. Aluminium futures slipped 1.4% to the lowest in almost five months on concerns about demand in top consumer China.
The gold futures price rose by US$26.40 or 1.1% to US$2,451.90 an ounce on Tuesday on US rate cut hopes. Spot gold was trading near US$2,410 an ounce at the US close.
Iron ore futures shed US34 cents or 0.3% to US$106.25 a tonne as the outcome of China's key Politburo meeting and the strong global supply outlook both weighed on sentiment.
What’s happening in small caps?
The S&P/ASX Small Ordinaries (XSO) ended 0.67% lower at 3,108 yesterday.