Falling inflation data supports market rally
Stocks rose Tuesday after the release of new U.S. inflation data, while traders awaited a key Federal Reserve policy decision.
US consumer price inflation eased more than expected in November to its lowest level in almost a year. The rate of increase in the consumer price index fell to 7.1 per cent last month, lower than the 7.3 per cent forecast by economists and down from 7.7 per cent in October. It is the lowest level since December 2021. Overall CPI rose 0.1 per cent from the previous month, less than the 0.4 per cent increase in October.
Investors are now anticipating the Federal Reserve’s next rate-hiking decision at the conclusion of its two-day policy meeting on Wednesday. Traders are largely pricing in a 50-basis point increase, a slight decline from the previous four hikes.
Overnight the Dow rose 105 points, or 0.31 per cent, after surging more than 700 points earlier in the day. The S&P 500 added 0.73 per cent, while the Nasdaq Composite rose 1.01 per cent.
However, major indexes came off their best levels as the day continued. At session highs, the S&P 500 was up 2.77 per cent, while the Nasdaq advanced 3.84 per cent.
On the energy transition front – in a landmark achievement – US scientists have achieved energy gain in a fusion reaction for the first time, heralding the breakthrough as evidence that the technology could eventually provide an abundant, zero carbon alternative to fossil fuels. It is believed that this breakthrough is the first tentative step towards a clean energy source that could revolutionise the world,
And Canada intends to accelerate new projects process as a part of Critical Minerals Strategy. Canada's Natural Resources Minister Jonathan Wilkinson wants critical minerals projects to be built in less than a decade driven by government efforts to cut red tape. Presently, the government estimates show that it can take up to 25 years for a mining project to become operational.
And China has begun a W.T.O. dispute over American chip export controls. Beijing accused the United States of trade protectionism by effectively blocking tech companies from selling advanced chips to China, hampering the Chinese tech industry. At the same time, Jlapan and the Netherlands are in talks to join the U.S. in tightening export controls on chipmaking machinery.
Across the sectors Energy, REITs among the sector leaders. Social media stocks rallied after headlines about a congressional push to ban TikTok. Energy rallied alongside crude, with oil services one of the best-performing areas. EVs were weighed down by Tesla which fell 4 per cent
.
Futures
The SPI futures are pointing to a 0.2 per cent gain.
Currency
One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 68.53 US cents (Tue: 67.49 US cents).
Commodities
Iron ore futures are pointing to a 0.8 per cent gain. Gold added 1.7 per cent. Silver gained 2.3 per cent. Copper rose 1.2 per cent and oil gained 2.9 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris gained 1.4 per cent, Frankfurt added 1.3 per cent and London’s FTSE closed 0.8 per cent higher.
In Asian markets, Tokyo’s Nikkei added 0.4 per cent, Hong Kong’s Hang Seng gained 0.7 per cent and China’s Shanghai Composite closed 0.1 per cent lower.
Yesterday, the Australian sharemarket added 0.3 per cent to close at 7203..
Ex-dividends
Fitzroy River Corp (ASX:FZR) is paying 0.5 cents fully franked
Dividends payable
National Australia Bank (ASX:NAB)
Graincorp (ASX:GNC)
Infratil (ASX:IFT)
Oceania Healthcare (ASX:OCA)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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Source: Finance News Network
