Stocks extend gains on better-than-expected PPI data

Stocks rose Thursday after June’s producer price index report rose less than anticipated, building upon optimism from Wednesday’s consumer price index data. The PPI, which measures what wholesalers pay for goods, rose 0.1 per cent in June. Economists polled by Dow Jones had expected an increase of 0.2 per cent.

Core PPI, which strips out volatile food and energy prices, climbed 0.1 per cent also lower than expectations.

This came after the S&P 500 closed at its highest level in over a year.

Overall, overnight the S&P 500 climbed 0.85 per cent to reach 4,510.04, while the Dow Jones Industrial Average added 47.71 points, or 0.14 per cent, to close at 34,395.14. The Nasdaq Composite advanced 1.58 per cent to end at 14,138.57. It was the fourth consecutive day of gains for the major averages.

In company news, big tech stocks continued to charge higher. Amazon advanced on the back of its Prime Day sale, while chipmaker Nvidia also rose. Alphabet, which updated its Bard chatbot, added more than 4 per cent.

Bank earnings kick off Friday US time, with JPMorgan Chase, Citigroup and Wells Fargo all set to report.

The Cboe Volatility Index, or the VIX, finished below 14, a historically low level associated with complacency. The index is commonly referred to as Wall Street’s fear gauge as it measures the price of options often used to protect against market declines. Anxiety is near record lows now that investors have grown confident that the Fed’s forthcoming rate hike could be its last.

US regulators have launched an investigation into OpenAI, the maker of ChatGPT, to examine potential risks and harms caused by the AI chatbot's generation of false information, along with concerns over privacy, data security, and the negative outputs of generative AI products.

In commodity news, the lowest prices for rare earths since late 2020 this week are attributed to soft demand from green energy companies and the automotive sector, along with increased supply from China, as analysts express concerns about potential export restrictions.

Overall, all US sectors except for Health and Energy closed higher overnight. Communication Services was the best performer.

Futures

The SPI futures are pointing to a 0.5 per cent gain.

Currency

One Australian dollar at 7:20 AM was buying 68.88 US cents.

Commodities

Gold added 0.11 per cent. Silver jumped 2.63 per cent. Copper gained 2.26 per cent. Oil added 1.50 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 0.32 per cent, Frankfurt rose 0.74 per cent, and Paris closed 0.50 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 1.49 per cent, Hong Kong’s Hang Seng gained 2.60 per cent and China’s Shanghai Composite closed 1.26 per cent higher.

The Australian sharemarket closed 1.56 per cent higher at 7247.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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