The morning catch up: US consumer prices surge; Australian employment data due; markets remain volatile

© Reuters. The morning catch up: US consumer prices surge; Australian employment data due; markets remain volatile

The ASX is expected to lower its colours today as ASX 200 futures are trading 5 points lower, down -0.07% as of 8:20 am AEST.

“Attention today turns to the release of employment data for August at 11:30am today,” IG Markets analyst Tony Sycamore said.

“Last month (July), the unemployment rate in Australia increased to 3.7% from 3.5% as employment fell by 14,600. The participation rate fell to 66.7%, below the consensus expectation of 6.8%. The ABS noted that the softer number came during school holidays, which may have impacted the data.

"This month the market is looking for a +25,000 rise in employment and for the unemployment rate to remain stable at 3.7%. The participation rate is expected to remain unchanged at 66.7%.”

There were mixed results on Wall St after inflation figures came in hotter than expected.

US consumer prices surged 0.6% in August, marking the largest increase in 14 months, largely propelled by escalating oil prices. However, broader inflationary pressures remain relatively subdued.

In August, the Consumer Price Index (CPI) indicated that core inflation, which excludes volatile energy and food prices, rose by a modest 0.3%. This rate exceeded Wall Street's expectations and contributed to a cautious sentiment across financial markets. Conversely, core inflation had risen by a more restrained 0.2% in the two months prior.

The annual rate of inflation edged upwards, reaching 3.7% in August from 3.2% in July and 3% in June - a 27-month low. Meanwhile, the yearly core inflation rate decelerated to 4.3%, marking its lowest point in 22 months, down from 4.7% previously.

The August data paints a nuanced picture, revealing a noticeable, yet selective, inflationary surge, primarily driven by oil prices. This has prompted varying degrees of concern and optimism within the financial sector.

“This was bad news for Americans who feel inflation most acutely when filling their tanks and writing their rent checks,” said Navy Federal Credit Union corporate economist Robert Frick said.

“And given core inflation rose, it’s clear inflation around current levels may be with us for months.”

Economist Ali Jaffery of CIBC Economic said the inflation report “does keep alive the risk that the Fed might hike again in the fall.

“However, the broader data continue to suggest that the US economy is slowing and, even if the path is a bit bumpy, we expect the Fed will hold.”

What happened yesterday?

Here’s what we saw (source Commsec):

US markets

Were choppy on Wednesday with a mixed US inflation report reinforcing speculation the US Federal Reserve will pause its rate hikes but refrain from calling the end of its tightening cycle.

Megacap growth stocks Tesla (NASDAQ:TSLA), Meta Platforms, Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) gained between 1.1% and 2.6%. Ford Motor (NYSE:F) shares lifted 1.5% on the vehicle maker's plans to double the production of its hybrid F-150 pickup trucks in 2024. Citigroup (NYSE:C) climbed 1.7% on plans to revamp its top management structure.

Apple shares (NASDAQ:AAPL) fell 1.2% as China flagged security problems with iPhones. American Airlines (NASDAQ:AAL) dipped 5.7% after cutting its earnings outlook amid a jump in jet fuel prices. Shares of 3M (NYSE:MMM) also dropped 5.7% after the company's finance chief warned of a "slow growth environment".

• The Dow Jones index fell by 70 points or 0.2%.
• The S&P 500 index rose by 0.1%.
• The Nasdaq index added 40 points or 0.3%.

Fell on Wednesday. Retail stocks dropped 0.9%, with shares of Zara owner Inditex (BME:ITX), the world's biggest fashion retailer down as much as 3% as higher operating expenses and concerns over future performance overshadowed a 14% lift in gross profit.

BP (LON:BP) shares lost 2.8% after the oil firm CEO's abrupt exit, while investors braced for the European Central Bank's monetary policy decision on Thursday. Eurozone industrial production fell by 1.1% in July (survey: -0.9%).

• The continent-wide FTSEurofirst 300 index slid 0.3%.
• In London, the UK FTSE 100 index was slightly lower.

Were stronger against the US dollar in European and US trade.

• The Euro rose from US$1.0716 to US$1.0759 and was near US$1.0730 at the US close.
• The Aussie dollar lifted from US63.86 cents to US64.33 cents and was near US64.20 cents at the US close.
• The Japanese yen firmed from 147.61 yen per US dollar to JPY147.16 and was near JPY147.45 at the US close.

Global oil prices fell on Wednesday as a surprise build in US crude inventories, which rose by 4 million barrels last week, confounded analysts' expectations for a 1.9 million-barrel drop.

• The Brent crude price fell by US18 cents or 0.2% to US$91.88 a barrel.
• The US Nymex crude price shed US32 cents or 0.4% to US$88.52 a barrel.

• The copper futures price gained 0.1% and the aluminium futures price added 0.4%.
• The gold futures price fell by US$2.60 or 0.1% to US$1,932.50 an ounce.
• Spot gold was trading near US$1,908 an ounce at the US close.
• Iron ore futures gained US20 cents or 0.2% to US$120.53 a tonne, buoyed by expectations of pre-holiday restocking demand from steelmakers in China, although gains were limited by a weakening steel market.

The S&P/ASX Small Ordinaries (XSO) fell 0.91% yesterday and has lost 2.24% over the past five trading days.

It’s a steady news day today, and you can read about the following and more throughout the day.

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