US equity markets surge off lows despite higher than expected inflation data
US equities finished higher in Thursday trading, near best levels after reversing a big decline from right after the open – this included the Dow Jones surging 1,500 points from peak to trough, as traders shook off another hot inflation report.
Stocks fell to session lows when the September consumer inflation report showed a larger-than-expected increase. The consumer price index increased 0.4 per cent for the month, more than the 0.3 per cent estimate from Dow Jones. On an annual basis, inflation was up 8.2 per cent.
The data indicated prices continued to climb at a brutally rapid pace in September, with a key inflation index increasing at the fastest pace in 40 years, bad news for the Federal Reserve as it struggles to wrestle the cost of living, back under control.
The inflation data has almost increased the certainty of another ¾ per cent rate rise in November. This confirmation helped markets rally off their lows.
The Dow Jones Industrial Average rose 2.83 per cent after being down more than 500 points earlier in the day. The S&P 500 climbed 2.60 per cent breaking a six-day losing streak. The Nasdaq Composite gained 2.2 per cent.
Across the sectors, Gains in energy and bank stocks led the rebound. Shares of Chevron gained 4.9 per cent as oil prices spiked, and bank stocks Goldman Sachs rose 4 per cent and JPMorgan 5.50 per cent. A reversal in big tech names such as Apple and Microsoft and a surge in semiconductors Nvidia and Qualcomm also contributed to the move higher.
In semiconductor news , Samsung Electronics has been given a one-year exemption from U.S. restrictions on exports of chip equipment to China. The move suggests the Biden administration is giving relief to American allies from the new rules which are roiling the industry.
The energy sector continues to attract investors attracted by dividend yields, low valuations and capital management initiatives like share buy backs.
A decade ago the Euro Stoxx oil and gas index traded at 10 times forward earnings. It is now at five times — at least in part because fossil fuels are widely perceived as on their way out of the energy mix.
Oil companies read low valuations as a signal to reduce investments in all but the very best new oilfields. Indeed, their capital expenditure has fallen a third over the past decade and as a result their cash flows are now becoming a haven for investors.
Currencies
One Australian dollar has strengthened slightly to the US dollar yesterday, buying 62.95 US cents
Commodities
Iron ore futures are pointing to a 1.4 per cent fall.
Gold shed $6.50 or 0.4 per cent to US$1671 an ounce.
Silver fell $0.11 or 0.6 per cent to US$18.83 an ounce.
Copper added $3.65 or 1.1 per cent to US$346.15 a pound.
Oil gained $1.92 or 2.2 per cent to US$89.19 a barrel.
Futures
The SPI futures are pointing to a 1.7 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris added 1 per cent, Frankfurt gained 1.5 per cent and London’s FTSE closed 0.4 per cent higher.
In Asian markets, Tokyo’s Nikkei lost 0.6 per cent, Hong Kong’s Hang Seng dropped 1.9 per cent and China’s Shanghai Composite shed 0.3 per cent.
Yesterday, the Australian sharemarket lost 0.1 per cent to close at 6643.
Ex-dividends
Harvey Norman (ASX:HVN) is paying 17.5 cents fully franked
Lion Selection Group (ASX:LSX) is paying 1.5 cents unfranked
Dividends payable
29Metals Ltd (ASX:29M)
BSP Financial Group Ltd (ASX:BFL)
Cash Converters International Ltd (ASX:CCV)
Coventry Group Ltd (ASX:CYG)
Cryosite Ltd (ASX:CTE)
Embelton Ltd (ASX:EMB)
Fonterra Shareholders Fund (ASX:FSF)
Gale Pacific Ltd (ASX:GAP)
HUB24 Ltd (ASX:HUB)
Imperial Pacific Ltd (ASX:IPC)
Link Administration Holdings Ltd (ASX:LNK)
London City Equities Ltd (ASX:LCE)
Peet Ltd (ASX:PPC)
Pepper Money Ltd (ASX:PPM)
Teaminvest Private Group Ltd (ASX:TIP)
XRF Scientific Ltd (ASX:XRF)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
