- The ASX 200 is expected to open almost flat as light positions are preferred ahead of a holiday-extended weekend.
- US inflation surged 5% in May, compared to the same month last year.
- Gold prices inched up after data showed US consumer prices increased more than expected last month.
On Thursday, the benchmark index continued its uptrend and marked an all-time high closing of 7,302.5, after gaining 0.44%. Today, the ASX 200 is expected to open almost flat as market participants prefer to sit on light positions ahead of a holiday-extended weekend, despite a generally positive broader environment.
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On Thursday, global equity markets surged to new highs, and bond yields softened after a jump in US inflation was viewed as not sufficient enough to make the US Federal Reserve alter its easy monetary policy stance that rising consumer prices will be transitory. Compared with the same month last year, the US CPI surged 5%, the largest annual gain since August 2008.
Surprisingly, strong US inflation data in April 2021 had sent investors into a tizzy, prompting caution ahead of May’s data. However, this month risk assets have remained buoyant as central bankers signalled a willingness to keep monetary taps open until economic recovery takes hold.
Also, in the United States, data revealed people filing new claims for unemployment benefits dropped last week to the lowest level in nearly 15 months, adding more fuel to the rally. The initial jobless claims fell by 9,000 to 376,000 in the week ended 5 June, Labor Department data revealed on Thursday.
On Wall Street, the Dow Jones rose 0.05%, to 34,466.24, while the S&P 500 gained 0.47%, to a record high of 4,239.19, surging past its previous all-time high of 4,238.04. The NASDAQ Composite was up 0.78%, to 14,020.33, spurred by growth stocks that thrive on low-interest rates.
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The 10-year US Treasury note's yield fell to a new three-month low of 1.440%. When the market participants were worried about surging inflation back in March, the yield had spiked to as high as 1.776%.
Market participants reversed course and sent longer-term US Treasury yields lower during a jittery trading session on Thursday, which is affirming their view that inflationary pressure is temporary.
On Thursday, the dollar index was slightly down after trading in a range earlier in the session as market participants digested elevated US inflation while eyeing the US Federal Reserve's next meeting. The dollar index fell 0.11% to 90.041.
The Australian and the New Zealand dollars were seen testing their lower levels as a consistent decline in the bond yields undermined their rate advantage ahead of US inflation data. The Aussie last traded at $0.7732, after running into resistance at $0.7765 overnight. The Kiwi dollar was up 0.2%, to $0.7189.
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Technology shares to open higher
One sector that fuelled Wall Street’s rally was tech space. The 10-year Treasury yield, which often rises with inflation, fell to a three-month low, far below its recent peak of 1.75%, helping technology shares or growth shares in general to outperform.
Crude oil ticked up
Crude oil prices ticked up on Thursday to their highest level in more than two years in a volatile trading session. After new US unemployment claims fell to their lowest since the COVID-19 pandemic began, the optimism for strong economic recovery helped fuel demand for crude oil.
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Gold traded higher
On Thursday, gold prices inched up after data showed US consumer prices increased more than expected last month but eased fears over the central bank tapering its monetary support.
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Spot gold rose 0.3% to US$1,893.75 per ounce by 1:43 PM EDT, having earlier hit its lowest level since 4 June at US$1,869.46. US gold futures closed the session at US$1,896.40 an ounce.
The most active iron ore futures for September month delivery on China's Dalian Commodity Exchange closed 0.7% higher at 1,178 yuan (US$184.53) per tonne.
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Copper prices fell on Thursday, pressured by signs of sluggish demand for the red metal from top metals consumer China and its efforts to curb surging prices for base metals. The benchmark three-month copper futures contract on the London Metal Exchange (LME) eased 0.9% to US$9,889 a tonne by 1555 GMT, close to its lowest since late April 2021.