Global Markets Move Higher, Shrugging Off Stronger-Than-Expected US Inflation Report

Wall Street traders in a happy mood.

Global markets moved higher overnight, shrugging off a stronger-than-expected inflation report out of the United States.

Markets at 7:40am (AEDT):

  • ASX SPI 200 futures +0.8pc, ASX 200 (Wednesday’s close) -0.3pc at 5,841
  • AUD: 79.23 US cents, 56.58 British pence, 63.62 Euro cents, 84.76 Japanese yen, $NZ1.08
  • US: Dow Jones +1.1pc at 24,905, S&P 500 +1.3pc at 2,698, Nasdaq +1.9pc at 7,143
  • Europe: FTSE +0.6pc at 7,213, DAX +1.2pc at 12,339, Euro Stoxx 50 +0.9pc at 3,369
  • Commodities: Brent crude +2.8pc at $US64.45/barrel, spot gold +2pc at $US1,356.80/ounce, iron ore +1.4% at $US78.41/tonne

European stocks initially dipped into negative territory on the news the US consumer price index rose by 0.5 per cent last month, ahead of forecasts.

However, the annual pace of inflation remained unchanged and a surprise drop in US retail sales also tempered investor nerves and saw European markets claw back to close higher.

On Wall Street, markets fell at the start of the session but later pushed higher, led by technology and bank stocks.

The Dow Jones closed 1 per cent higher, marking its fourth straight day of gains.

Concerns over rising inflation and the potential for a faster pace in interest rate rises had sparked the market turbulence seen across the globe last week.

“I think the fears of the economy overheating have been a little bit balanced out with the combination of these two numbers,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

“The bond market is not suggesting that runaway inflation is a deep concern.”

The yield on the 10-year treasury rose to 2.9 per cent, a new four-year high.

“The combination of rising inflation and weaker demand would not normally bode well for the outlook and financial markets,” wrote St George economists.

“However, more data will be necessary to confirm underlying trends. It is still too early to tell if a pick-up in inflation is long-lasting and as a result of the economy running into capacity constraints.”

Earnings reports, jobs figures in focus

Locally, ASX SPI 200 futures are higher, indicating the Australian market will bounce at the open.

Earnings reports continue to be a major driver for individual stocks, with Telstra, Origin Energy and miner South 32 among those handing down their results today.

Jobs figures for January will be released, with economists expecting the unemployment rate to remain steady at 5.5 per cent and about 15,000 jobs to have been created in the month.