US inflation data boosts local stocks

Australian shares are expected to open higher on Friday after the release of inflation data in the US allayed worries of more sharp rate hikes in the near term.

ASX futures were up 35 points, or 0.48 percent, to 7266 just before 7am this morning.

Australian stocks are expected to rise today.

Australian stocks are expected to rise today. Credit:Louie Douvis

Wall Street rose on Thursday after a report showed that US inflation had slowed again over the past month, bolstering hopes that the Federal Reserve could ease the economy with smaller rate hikes.

The S&P 500 was up 0.5 percent after oscillating between small gains and losses throughout the morning. While the US inflation report was clearly encouraging, stocks had already rallied earlier this week in anticipation of just such data. The numbers were in many ways in line with forecasts, and analysts warned investors not to get carried away.

The Dow Jones Industrial Average rose 252 points, or 0.7 percent, to 34,219 when it traded in New York in the afternoon, and the Nasdaq Composite was up 0.6 percent. They also used to drift between wins and losses.

Small company stocks overtook the broader market. The Russell 2000 was up 1.5 percent.

America’s painfully high inflation has been the focus of Wall Street’s wild moves for more than a year. Of late, stocks have risen and bond yields have fallen on hopes that inflation, after peaking in the northern hemisphere over the summer, could prompt the Federal Reserve to ease its tide of rate hikes. Such increases can stifle inflation, but do so by slowing the economy and risking triggering a recession. They also hurt investment prices.

In the bond market, Thursday’s inflation report pushed yields further lower as traders grew more confident the Fed will delay the size of its next rate hike. They are now broadly forecasting a hike of just 0.25 percentage point next month, down from the half-point hike in December and from four previous hikes of 0.75 percentage points.

https://www.smh.com.au/business/markets/us-inflation-data-to-buoy-local-shares-20230113-p5cc9o.html?ref=rss&utm_medium=rss&utm_source=rss_business US inflation data boosts local stocks

Brian Lowry

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