July 23, 2024

Australian Shares Rebound As Investors Eye US Inflation Data

What’s going on here?

Australian shares rose on Thursday, with the S&P/ASX 200 index up 0.9% to 7,887.40 by 0048 GMT, recovering from a 0.2% dip on Wednesday.

What does this mean?

Investors are optimistic as Australian stocks rally, especially in mining, financial, and energy sectors, ahead of key US inflation data. Traders are keenly awaiting the US Consumer Price Index (CPI) release later today, which could signal if the Federal Reserve will cut interest rates. Key mining stocks climbed up to 1.2%, with BHP Group rising 0.3%. Financial stocks, sensitive to interest rate changes, saw a 1% rise, with the ‘Big Four’ banks gaining between 0.1% and 1.5%. Energy stocks were also up, with Woodside Energy increasing 1.3% and Santos 0.2%.

Why should I care?

For markets: Watching the Fed.

All eyes are on the upcoming US inflation data. A positive CPI report could heighten expectations for a rate cut, further boosting rate-sensitive stocks like those in financials. With gains also seen in healthcare, real estate, and IT, there’s widespread positive sentiment in the Australian market.

The bigger picture: Global ripple effects.

Neighboring New Zealand also felt the optimism, with its S&P/NZX 50 index reaching a high not seen since June 5, up 0.4%. This followed the Reserve Bank of New Zealand’s decision to keep its cash rate unchanged but hint at potential future cuts. Synlait Milk surged with support from major stakeholder a2 Milk Company, highlighting how interconnected global markets can amplify local gains.

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