Australian shares are expected to rally today, with ASX futures rising 25 points or 0.35% to 7,094 this morning.
We saw the dollar add 0.2% to close at 66.88 US cents, while Bitcoin was buoyant, adding 1.5% to US$30,632 in late US trade.
Strong US data
Data out of the US was strong on a number of fronts including consumer confidence and new home builds, signalling to investors that the economy is resilient and the recession bogeyman is still tying his shoelaces, though observers think he might make an appearance in 2024.
On Wall Street the Dow was up 0.6%, the S&P rose 1.1% and the Nasdaq added 1.7%. Consumer Discretionary and Information Technology were strong, while Health Care flatlined.
Across the mega caps, there was positive movement, paced up by the tech sector, notably Tesla (NASDAQ:TSLA) (3.8%) and Meta (3.1%).
Back home the May CPI data is due from the Australian Bureau of Statistics (ABS) at 11:30am, at which time we’ll know whether the Australian economy has slowed sufficiently to stay the RBA’s hand when it meets next week to decide on rates.
Most market economists are expecting the inflation figure to land somewhere around 6.1%, which is an improvement on where it was late last year, but it’s still high.
Crucially, it’s still well above the RBA’s target figure of 2-3%, a figure which it has doggedly pursued even as there are indications that we are heading the same way as New Zealand – towards a recession.
Just yesterday the World Bank warned that the global economy is at a ‘critical and perilous juncture’, after continued rate rises by central banks in most developed countries.
Central banks are all doing it
The ABC reports that there have been a staggering 88 rate rises around the world in the last calendar year.
Commentators think rates will still go up next week unless there’s a surprise lowball inflation figure from the ABS. Let’s wait and see.
The government looks to have a bigger surplus than the $4.2 million planned, thanks to a rounding error when it delivered the Budget back in May.
Revenue has been driven by the strong employment market, higher commodity prices and company profits.
Treasurer Jim Chalmers told the Property Council of Australia in the Northern Territory: "One of the big priorities we came into government with was getting the Budget on a more sustainable footing.
"And the improvements in revenue that we’ve seen in recent times – driven by a combination of good prices for our exports and a consistently strong labour market – have helped us in that task. "
In other news
We also saw the following movements in the markets:
- Stoxx 50 (+0.6%) FTSE (+0.1%) CAC (+0.4%) DAX (+0.2%);
- Spot gold -0.5% to $US1913.28/ounce;
- Brent crude -2.3% to $US72.45 a barrel;
- US oil -2.2% to $US67.85 a barrel; and
- Iron ore +3.2% to $US112.55 a tonne.