A rally in global stocks and a fall in bond yields overnight sees the local market set to open higher this morning. The ASX SPI 200 Futures are trading up 57 points (0.73%) to 7,827.
US producer prices increased less than expected last month, boosting expectations of interest rate cuts
It is set to be a busy day of earnings reports, with results scheduled for AGL Energy (ASX:AGL) (ASX:AGK), Amotiv, Aurizon, Bravura, BWP, Computershare, Evolution Mining, HomeCo Daily Needs REIT, Pro Medicus and Seven Group.
Plus, results are already out for the Commonwealth Bank and Seven West Media.
The CBA — Australia's largest bank — has reported that its profit dropped 6% to $9.5 billion in the year to June 30.
The bank, which writes around a quarter of the country's mortgages, noted a growing trend of borrowers are struggling to meet their loan payments amid high interest rates and sticky inflation.
"Consumer arrears increased reflecting the impact of higher interest rates and cost of living pressures on some borrowers”, CBA said in a statement.
CBA declared a final dividend of $2.50 per share, compared with $2.40 a year ago.
Seven West Media has revealed a statutory net profit after tax of $45 million — down 69% compared to the previous year. The company attributed this fall to softer advertising markets, despite experiencing growth in audience numbers and revenue shares.
In other news, the Australian Securities and Investments Commission (ASIC) has commenced proceedings in the Federal Court against ASX Limited, Australia’s largest market operator, alleging misleading statements regarding its Clearing House Electronic Subregister System (CHESS) replacement project.
ASIC claims ASX made misleading statements that the project was "on track for go-live" in April 2023 and was “progressing well”. However, at the time of the announcements in February 2022, the project was not progressing as indicated.
The regulator alleges that ASX’s statements were misleading and deceptive as it has no reasonable basis to imply the project was on track to meet future milestones.
Overseas markets
US sharemarkets climbed on Tuesday after softer US producer prices data reinforced bets of an interest rate cut by the US Federal Reserve in September.
The Dow Jones index rose by 409 points or 1%, the S&P 500 index gained 1.7% and the Nasdaq index added 407 points or 2.4%.
- Chipmaker Nvidia led gains in megacaps, ending up 6.5%.
- Alphabet (NASDAQ:GOOGL) gained 1.2% after Google launched its first AI-powered Android update and new Pixel 9 phones at its annual Made by Google event.
- Starbucks (NASDAQ:SBUX) soared 24.5%, its biggest one-day percentage gain ever, after the coffee giant appointed Chipotle Mexican Grill (NYSE:CMG)'s head Brian Niccol as chairman and CEO. Chipotle dropped 7.5%.
- Home Depot (NYSE:HD) reversed losses and climbed 1.2%. The home improvement chain forecast a decline in annual profit and a bigger drop in its annual comparable sales.
US government bond yields slipped on Tuesday after the release of tame US producer price data, which looks unlikely to divert the US Federal Reserve from an easing path, with Wednesday's consumer prices report set to fill out the picture.
Fed Bank of Atlanta president Raphael Bostic said he’s looking for “a little more data” before supporting a reduction in rates, while reiterating he’ll likely be ready to cut “by the end of the year.”
The US 10-year Treasury yield fell by 6 points to 3.84%. The US 2-year Treasury yield declined 8 points to 3.94%.
European sharemarkets closed higher on Tuesday, led by a 1.1% lift in healthcare stocks.
- Spain's benchmark stock index led regional gains with a 0.7% rise after the country's final EU-harmonised 12-month inflation rate fell to 2.9% in July from 3.6% in June (survey: 2.9%).
- The continent-wide FTSEurofirst 300 index gained 0.6%.
- In London, the UK FTSE 100 index lifted 0.3%, lagging its peers, after data showed a slowdown in average earnings growth to a two-year low and an unexpected fall in the unemployment rate to 4.2% in June, pushing the British pound up against the US dollar.
Currencies
Currencies were stronger against the US dollar in European and US trade.
- The Euro rose from US$1.0914 to US$1.0999 and was near US$1.0995 at the US close.
- The Aussie dollar lifted from US65.84 cents to US66.37 cents and was near US66.35 cents at the US close.
- The Japanese yen firmed from 147.93 yen per US dollar to JPY146.60 and was near JPY146.85 at the US close.
Commodities
Global oil prices tumbled 2% on Tuesday as traders grew less nervous about the potential for a wider war in the Middle East, with Iran yet to act on threats to retaliate on Israel for the assassination of a Hamas official in Tehran.
The Brent crude price fell US$1.61 or 2% to US$80.69 a barrel. The US Nymex crude price slid US$1.71 or 2.1% to US$78.35 a barrel.
Base metal prices were mixed on Tuesday.
- Copper futures fell 0.5%, burdened by surging inventories and lacklustre demand in China.
- Aluminium futures lifted 0.5%.
The gold futures price rose US$3.80 or 0.2% to US$2,507.80 an ounce on Tuesday, as the US dollar and US Treasury yields crept lower after the US producer prices data. Spot gold was trading near US$2,464 an ounce at the US close.
Iron ore futures slipped US23 cents or 0.2% to US$100.44 a tonne on Tuesday, as faltering demand amid steel output cuts in China outweighed support from some short-covering activities.
What’s happening in small caps?
The S&P/ASX Small Ordinaries ended 0.45% higher yesterday, as the ASX200 gained 0.17%.