Despite cooling consumer inflation figures for June and growing anticipation that the US Federal Reserve will cut interest rates in September, US markets were mixed overnight.
This won’t deter the Australian bourse, with futures predicting a rise of 0.6% to 7,914 points when trade starts today.
US inflation data in
The Consumer Price Index (CPI) fell by 0.1% in June, the first monthly decline since May 2020, compared to expectations of a 0.1% increase.
The annual growth rate slowed from 3.3% to 3.0%. Core CPI, excluding food and energy, increased by 0.1%, with the annualised rate of core inflation decreasing from 3.4% to 3.3%.
The Dow Jones rose by 32 points or 0.1%, but the S&P 500 fell by 49 points or 0.9% and the Nasdaq dropped 364 points or 2.0%, driven by a sell-off in mega-cap technology stocks, which have propelled the Nasdaq to a 33% gain over the past year.
Nvidia led the losses among chip makers with a 5% drop, while Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) each fell by more than 2%.
The onset of the quarterly earnings season was met with investor disappointment.
Shares in PepsiCo (NASDAQ:PEP), which initially fell by more than 3%, ended the day up 0.25% despite reporting earnings per share of US$2.28 for the quarter, surpassing estimates of US$2.15.
That said, investors focused on weaker revenue figures as an indicator that recent price hikes had reduced consumer demand.
Travel-related stocks were negatively impacted by a near double-digit decline in Delta Airlines (NYSE:DAL) shares, which fell by 5% after the carrier's earnings missed expectations, highlighting the adverse effects of discounting on profitability.
Pfizer (NYSE:PFE) shares, on the other hand, rose by almost 1% following positive news regarding the development of a daily weight loss pill.
European shares buoyant
The European share markets rose on Thursday, spurred on by earlier optimism from Wall Street.
Real estate and consumer discretionary stocks were among the top performers, supported by a decline in continental government bond yields.
Luxury goods companies LVMH, Hermes, Kering (EPA:PRTP), and Adidas (ETR:ADSGN) saw gains ranging from 1% to 2%.
Positive economic data further supported the markets, with German inflation matching forecasts at an annual pace of 2.2% in June, and UK GDP exceeding expectations with a 0.4% growth in May.
The FTSEurofirst 300 index increased by 11 points or 0.6%, while the UK FTSE 100 index rose by 29 points or 0.4%.
Currencies and commodities
Major currencies rose against the US dollar, reflecting the fall in Treasury yields and the expectation of multiple rate cuts by the Fed.
The Euro strengthened from US$1.0840 to US$1.0900 and was near US$1.0867 at the US close.
The Australian dollar traded between US$0.6760 and US$0.6799, closing near US$0.6760. The Japanese yen appreciated from JPY161.62 per US dollar to JPY157.44, ending near JPY158.80 at the US close.
Commodity prices were supported by the moderation in the US dollar.
Global oil prices rose, with Brent crude gaining US$0.32 or 0.4% to US$85.40 per barrel, and US Nymex crude improving by US$0.52 or 0.6% to US$82.62 per barrel.
Base metal prices were mixed, while iron ore futures recovered, gaining 0.8%.
The Comex gold futures price rose by US$42.20 or 1.8% to US$2,421.90 per ounce, with spot gold trading near US$2,414 per ounce at the US close.
Market snapshot
- Australian dollar: steady at 67.59 US cents
- S&P 500: -0.9% to 5,584 points
- Nasdaq: -1.9% to 18,283 points
- FTSE: +0.4% to 8,223 points
- EuroStoxx: +0.6% to 519 points
- Spot gold: +1.8% to $US2,414/ounce
- Brent crude: +0.6% to $US85.56/barrel
- Iron ore: +1.4% to $US106.9/tonne
- Bitcoin: -0.3% at $US57,368
Source: the ABC