US Inflation Cool Down Triggers Australian Shares Slump
The Australian stock market is expected to open lower this morning, despite the overall positive trajectory of global markets on Thursday. The latest consumer price index (CPI) report for July indicates subsiding inflation pressures, boosting speculation that Federal Reserve policymakers might not need to hike up interest rates during their next policy meeting.
Minor gains were observed across multiple US indices with S&P 500 seeing less than a marginal gain of 0.1%, Dow Jones Industrial Average rising by 0.2% and NASDAQ Composite increased by 0.1%. Interestingly enough, Canadian markets outperformed their American counterparts with the S&P/TSX Composite experiencing growth by nearly one-third percent.
Investors are predicting that these benign inflation figures may dissuade Fed from increasing interest rates during its imminent policy meet-up. Over since last year, the Federal Reserve has been aggressively hiking up the benchmark rate which currently sits at the highest level it’s seen in over two decades, causing significant stress on equity markets.
On the commodities front, Brent crude oil prices slumped down by 1.5% closing at USD $86.37 per barrel while gold prices underwent a marginal decline, settling down at USD $1,913.19
Australian government bonds saw some action too – yields for (2-Year bonds escalated to the 4% mark, whereas 10 Year bond yield also climbed to 4.086%. However, US Treasury notes painted mixed picture with the 2-Year yield at 4.85% while 10-year rates were at 4.107%.
Among major currencies, the Australian dollar lost some steam against the greenback, dropping to 0.6513, while the US Dollar Index was steady near 5-week highs.
Investor Sentiment Shifts Across Asia as Markets Respond to Latest Developments
Chinese stocks bounced back on Thursday, recovering from previous losses as market participants processed the most recent economic statistics from China amid anticipated further stimulus measures from Beijing. The surge was led by energy and financial sectors with PetroChina (SS:601857) lifting 1.5% while Sinopec (SS:600688) added 1.1% thanks to a boost in oil prices. CITIC Securities (SS:600030) saw a raise of 1.2%, whereas China International Travel Service Corp (SS:601888) experienced a growth of 0.9%. However, it wasn’t all green for consumer brands and auto manufacturers who faced some setbacks - Midea Group (SZ:000333) fell by 2.1%, alongside Great Wall Motor (SS:601633) which dipped by 1.3%. The well-known Shanghai Composite Index wrapped up the session with gains of 0.3%.
In Hong Kong, shares managed to recover from early downturns ending on a neutral note with communication and energy stocks leading the way forward; thanks in part to China Unicom's (HK:0762) impressive earnings report that sent its shares soaring by 3.3%. Other winners included CNOOC Ltd (HK:0883) which lifted 1%, PetroChina (HK:0857), up by over 2%, andTrip.com Group Ltd (HK:9961) increasing nearly 3% after news broke out about Beijing's approval for outbound group tours resuming for another set of countries including US & Australia.