The Australia share market is poised to open flat today after U.S. stocks eased from early gains but still edged higher in late trading on Wall Street after the latest report of surging prices appeared to keep the Federal Reserve on track to raise interest rates later this year.
The S&P 500 rose 13 points (0.3 per cent) on Wednesday. The Dow Jones Industrial Average rose 39 points (0.1 per cent) to 36,291 and the Nasdaq gained 35 points (0.23 per cent) to 15,188.
Yesterday the S&P ASX 200 gained 0.66 per cent to close at 7,438.9 points.
The SPI futures index is showing a 3 point easing this morning, with the market expected to open around 7,347 points.
Wall Street
The consumer price index, an inflation gauge that measures costs across dozens of items, rose 7% in December from a year earlier, the fastest pace since June 1982. On a monthly basis the CPI rose 0.5 per cent.
Excluding food and energy, “core CPI” was up 5.5% on the year, the biggest growth since February 1991.
It comes amid a shortage of goods and workers and on the heels of unprecedented cash flowing through the U.S. economy from Congress and the Federal Reserve.
The figures were broadly in line with estimates by leading economists and market futures rose after the release. Economists surveyed by Dow Jones had been expecting an increase of 7 per cent on an annual basis and 0.4 per cent for the month.
According to CBNC, “Fed officials are watching the inflation data closely and are widely expected to raise interest rates this year in an effort combat increasing prices and as the jobs picture approaches full employment.”
The central bank uses the price index as its primary inflation measure, but policymakers take in a wide range of other information in making decisions.
In London, the FTSE 100 ended higher on Wednesday, rising 60.35 points, or 0.8 per cent, to 7,564, led by mining and oil stocks following a global rally in risk assets, and a raft of positive earnings updates including a forecast lift from supermarket group Sainsbury’s.
Australian outlook
The SPI futures index is showing a slight easing this morning following the Wall Street reaction overnight. Oil and gas stocks are worth watching as the crude price showed further gains overnight, as did iron ore and nickel.
Commodities
Gold was trading at US$1,827.00 an ounce having gained 0.03 per cent overnight. Silver gained almost 2 per cent to trade at US$23.20 an ounce.
Iron ore was up 1.8 percent at US$126.75 a tonne as traders absorbed news out of Brazil yesterday that Vale and other miners were halting operations due to heavy rains.
Brent crude was 1.1 per cent higher at US$84.64 a barrel.
Nickel continued recent gains, up 1.59 per cent to trade at US$21,042 a tonne.
Currency
The Australian dollar again appreciated against the greenback, buying US$0.7288 (up 1.08 per cent), €0.6365 (up 0.35 per cent), £0.5316 (up 0.53 per cent) and NZ$1.063 (steady).
Happy Thursday.