Markets rally on cooler inflation data
Stocks jumped Thursday as traders cheered another report pointing to cooling US inflation.
The March producer price index, a measure of prices paid by companies and often a leading indicator of consumer inflation, declined by 0.5 per cent month over month versus economists’ expectations for prices to be flat.
The PPI data confirmed the easing inflation trend from Wednesday’s March’s consumer price index report, which advanced just 0.1 per cent month over month. Consumer prices grew 5 per cent on an annual basis, the smallest increase in nearly two years. However minutes from the March Federal Open Market Committee meeting showed that the Fed now expects the recent banking crisis to cause a mild recession later this year.
Overnight the S&P 500 climbed 1.33 per cent to 4,146.22 for its highest close since February. The Nasdaq Composite advanced 1.99 per cent to 12,166.27. The Dow Jones Industrial Average added 383.19 points, or 1.14 per cent, to 34,029.69.
With a recession looking likely, corporate profits are in focus this earnings season. Analysts expect that profits last quarter fell nearly 7 percent on an annualised basis, according to FactSet, the biggest decline since the early days of the pandemic. Some 78 firms in the S&P 500 have also warned investors to vastly lower their earnings expectations, the worst reading since the third quarter of 2019 when the US manufacturing sector was in recession.
Ultimately the coming earnings results could clarify the market’s muddled view on the economy. The bond market has been trading as if a larger recession is imminent, while stocks remain in positive territory for the year.
All eyes will be on the bank results out tomorrow: America’s largest banks are seen as a bellwether for the health of the economy. Analysts will likely grill them about their balance sheets and deposit flows in the wake of the turmoil that gripped the sector after the collapse of Silicon Valley Bank last month.
Across the sectors, Tech stocks rallied as communication services, consumer discretionary and information technology were among the notable gainers in the S&P 500. Mega-cap tech stocks advanced, with shares of Amazon up 4.7 per cent. Shares of Google-parent Alphabet and Meta were up 2.7 per cent and about 3 per cent, respectively. Tesla shares also rose nearly 3 per cent.
Futures
The SPI futures are pointing to a 0.2 per cent gain.
Currency
One Australian dollar at 7:10 AM is buying 67.83 US cents..
Commodities
Iron ore futures are pointing to a 0.45 per cent gain.
Gold added 1.49 per cent. Silver gained 2.03 per cent. Copper rose 1.15 per cent and oil lost 1.07 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE gained 0.2 per cent, Frankfurt added 0.2 per cent while Paris closed 1.1 per cent higher.
In Asian markets, Tokyo’s Nikkei added 0.3 per cent, Hong Kong’s Hang Seng rose 0.2 per cent and China’s Shanghai Composite closed 0.3 per cent lower.
Yesterday, the Australian sharemarket closed 0.3 per cent lower at 7324.
Ex-dividends
Cadence Capital (ASX:CDM) is paying 4 cents fully franked
CDO Opportunity Fund (ASX:CDO) is paying 7.5 cents fully franked
Turners Automotive (ASX:TRA) is paying 5.6111 cents 85 per cent franked
Dividends payable
Cash Converters International (ASX:CCV)
Civmec (ASX:CVL)
Cochlear (ASX:COH)
Corporate Travel Management (ASX:CTD)
CPT Global (ASX:CGO)
Embelton (ASX:EMB)
Fonterra Shareholders Fund (ASX:FSF)
Lindsay Australia (ASX:LAU)
Pepper Money (ASX:PPM)
QBE Insurance Group (ASX:QBE)
RAM Essential Services Property Fund REP)
Regis Healthcare (ASX:REG)
SRG Global (ASX:SRG)
Super Retail Group (ASX:SUL)
Vita Life Sciences (ASX:VLS)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Disclaimer
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