Outlook for the day: Positive for a fourth session after mild wholesale US inflation data bolstered conviction that US rates will drop next month.
ASX futures: up 57 points or 0.73%
Overnight themes:
US stocks posted strong gains after weaker-than-expected producer price gains prompted traders to increase bets on a 50-point rate cut next month.
The S&P 500 climbed 1.68% to its highest in a week and a half as rate-cut optimism temporarily outweighed any worries about an economic slowdown.
The Nasdaq surged 2.43% as rate-sensitive growth stocks outperformed. The value stock-heavy Dow put on a more modest 1.04%.
Stocks took flight after July producer prices increased less than expected. The producer price index (PPI) edged up 0.1%, down from 0.2% in June and half the growth forecast by economists. Year-on-year, the index expanded by 2.2%, down from growth of 2.7% in June.
The decline in wholesale inflation - the first of two inflation reports in 24 hours - prompted traders to increase the odds on a 50bp September rate cut from below 50% to 55%. The July Consumer Price Index (CPI) report is due tonight.
“The core PPI number furthers the narrative that the Fed has done an excellent job of keeping inflation relatively under control and that the more likely move is going to be a rate cut sooner rather than later. You have the CPI print [tonight]. Any data point is going to have an outsized influence on the market because people are so jittery right now” - Michael James, managing director of equity trading at Wedbush Securities.
The S&P tech sector soared 3%. Next best were two other sectors dominated by megacap tech giants: consumer discretionary +2.42% and communication services +1.48%. Materials gained 1.03% and financials 0.85%.
The night's only losing sector was energy, down 1.02% after oil broke a five-session win run. Crude prices fell after Iran said a ceasefire in Gaza might prevent retaliation for Israel's assassination of a Hamas leader on Iranian soil, and after OPEC lowered its demand forecast for this year and next. Reuters said senior Iranian officials indicated Iran would launch a direct attack on Israel if the current negotiations fail. Brent crude dropped 2% to US80.69 a barrel.
The Australian dollar rallied more than 0.7% to its highest in roughly three weeks. The Aussie, which fell as low as 63.5 US cents last week, was lately trading above 66.3 US cents.
Gold settled at a new closing high, edging up 0.15% to US$2,507.80 an ounce. The futures price traded as high as US$2,517.30 overnight, drawing within a few dollars of last week's intraday peak of US$25,22.50.
Key events today:
US consumer inflation report (CPI) - tonight
S&P 500: up 90 points or 1.68%
Dow: up 409 points or 1.04%
Nasdaq: up 107 points or 2.43%
Dollar: up 0.72% to 66.32 US cents
Iron ore (Dalian): up 0.09% to US$102.39
Brent crude: down US$1.61 or 2% to US$80.69
Gold: up US$3.80 or 0.15% to US$2,507.80
Silver: down 38 US cents or 1.35% to US$27.68
NYSE Arca Gold Bugs: up 1.58%
Bitcoin: up 3.5% to US$60,811
Copper (LME): down 0.53% to US$8,978.50
Nickel (LME): up 0.58% to US$16,400
Lithium carbonate (China futures): down 0.13% to US$10,849
Global X Lithium & Battery Tech ETF: up 2.34%
Uranium (spot): steady at US$82
BHP: up 0.19% (US); down 0.67% (UK)
