Australian shares are expected to open higher today, with futures up 80 points or 1% to 8045 near 6.25am AEST. This follows a positive session on Wall Street, where US stocks rebounded as investors cautiously stepped back in after last week’s sell-off. The key focus now shifts to the upcoming Consumer Price Index (CPI) report on Wednesday, which may heavily influence the Federal Reserve’s next move on interest rates.
At 4pm in New York, all major US indices showed gains:
- Dow Jones: +1.2%
- S&P 500: +1.2%
- Nasdaq: +1.2%
This CPI data release could determine whether Federal Reserve Chairman Jerome Powell will advocate for a 0.25% or 0.5% rate cut at the next meeting on September 19 (AEST).
In terms of market strategy, Morgan Stanley’s Lisa Shalett warned that investors relying on passive, market-cap-weighted indices may face risks due to market uncertainties. She advised maintaining maximum diversification as markets approach a critical juncture. Similarly, JPMorgan’s Mislav Matejka expressed skepticism about the broader market and recommended holding defensive sectors like healthcare, utilities, real estate, and staples, while noting that smaller-cap stocks may present better value.
Performance of Key Stocks:
- BHP: +0.8%
- Rio Tinto: +0.5%
- Tesla: +2.6%
- Microsoft: +1%
- Nvidia: +3.5%
- Apple: +0.04%, despite the launch of the iPhone 16, which CEO Tim Cook highlighted as fully designed with AI integration.
In contrast, Alphabet fell 1.6%, while Amazon gained 2.3%.
Market Highlights:
- ASX futures: +78 points or 1% to 8043 near 7am AEST
- AUD: Down 0.2% to 66.61 US cents
- Bitcoin: +6.1% to $US57,770
- Brent crude: +1% to $US71.75 a barrel
- Spot gold: +0.1% to $US2500.22/oz
- Iron ore: +0.7% to $US92.35 per tonne
Interest Rates:
- US 10-year yield: 3.70%
- Australia 10-year yield: 3.95%
- Germany 10-year yield: 2.17%
Economists and market analysts remain divided on the Federal Reserve’s next move. Evercore ISI’s Krishna Guha noted that while a dovish 0.25% rate cut seems likely, there is still debate over whether a more aggressive 0.5% cut might be warranted. ANZ Research favors a gradual approach, expecting a 0.25% cut as the economy trends toward a soft landing.
Today’s Agenda:
- Australia: Westpac consumer confidence and NAB business confidence for August
- China: Trade data
- Germany: Final CPI for August
- UK: Jobless rate and claims
- US: Small business optimism for August
Expert Insights:
Josh Gilbert, a market analyst at eToro, said Australia’s consumer confidence data will offer insights into how households are coping with rising living costs. With government measures like energy bill relief and potential tax cuts, there is hope that consumer spending could strengthen in the coming months, boosting confidence into 2025.
In the US:
Starboard Value called for an end to News Corp’s dual-class shares, citing the complicated family dynamics involved in the transition of power from Rupert Murdoch to his children, which could impact corporate governance.
Meanwhile, expectations for the upcoming CPI report suggest inflation remains largely under control. TD Securities predicts that core CPI will continue its modest gains, with a 0.14% month-over-month increase expected.
Overall, markets remain on edge as investors brace for key economic data that could determine the direction of interest rates and broader market sentiment in the weeks to come.
