The Australian share market will open on tenterhooks today, with ASX futures pointing to a 0.7% drop, as investors eye the latest inflation figures.
In a few hours, the Australian Bureau of Statistics (ABS) will release the latest CPI data, which is widely expected to have fallen slightly to 3.4% in April, down from 3.5% in the previous month, according to various economist surveys.
If the actual result is any higher, it will be a sign that consumer prices are still rising too quickly, making it unlikely for the Reserve Bank of Australia (RBA) to slash interest rates soon.
Anything lower would increase the odds of an RBA rate cut.
Tech buoys Wall Street
There was a mixed performance on US markets, which reopened for trading after the Memorial Day long weekend. Trading transitioned to a shorter settlement cycle for securities transactions.
A big sell-off in the world's largest bond market exerted downward pressure on stocks while traders weighed US economic data and a caution from Minneapolis Federal Reserve president Neel Kashkari that officials have not ruled out additional interest rate hikes.
The S&P 500 remained flat, the Dow Jones fell 0.6% and the tech-heavy Nasdaq rose 0.6%.
The latter lifted past 17,000 points for the first time, achieving a new record high, buoyed by a record high from artificial intelligence leader Nvidia, which surged 7.1% on bets that the artificial intelligence boom has a long way to run.
Tech spirits were also ‘artificially’ high on the news, reported by the Information, that Elon Musk's new AI startup, xAI, which recently raised US$6 billion, plans to build a new supercomputer to advance its AI capabilities.
On the other hand, the blue-chip Dow was dragged down by a 2.6% drop in Merck and other healthcare stocks, with Moderna shedding 8.1%.
Europe flat
European share markets saw broad-based sell-offs on Tuesday ahead of critical inflation data releases.
Travel and leisure sectors led the losses, falling 2.8% as shares of Flutter Entertainment dropped 7.4%.
A European Central Bank (ECB) survey indicated that eurozone consumer expectations for inflation in the next 12 months decreased to 2.9% in April from 3% in March, the lowest level since September 2021.
The continent-wide FTSEurofirst 300 index fell 0.6%, while the UK FTSE 100 index shed 0.8%.
Currencies and commodities
Currencies weakened against the US dollar in European and US trade. The Euro fell from US$1.0887 to US$1.0854 and was near US$1.0860 at the US close.
The Australian dollar dipped from US$0.6678 to US$0.6641 and was near US$0.6650 at the US close. The Japanese yen eased from JPY156.60 per US dollar to JPY157.15 and was near JPY157.20 at the US close.
Global oil prices increased on Tuesday amid escalating tensions in the Middle East, with reports of a vessel attack in the Red Sea and Israeli tanks reaching the centre of Rafah.
The Brent crude price rose by US$1.12 or 1.3% to US$84.22 a barrel, while the US Nymex crude price gained US$2.11 or 2.7% to US$79.83 a barrel.
Base metal prices also rose on Tuesday. Copper futures climbed 2% due to the prospects of interest rate cuts, a weaker US dollar and robust industrial profits data from China. Aluminium futures jumped 2.6%.
The gold futures price rose US$22 or 0.9% to US$2,356.50 an ounce on Tuesday, supported by a weaker US dollar.
Spot gold was trading near US$2,359 an ounce at the US close. Iron ore futures inched up US2 cents or less than 0.1% to US$117.68 a tonne on investor caution as steel demand remained subdued in China despite the latest property stimulus.
What’s happening with small caps?
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