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Wall Street’s rally extended into Tuesday’s session with the key indices rising sharply in afternoon trade as the S&P500 added 0.46%, the Dow Jones rose 0.48%, and the tech-heavy Nasdaq had the biggest rise of 0.7%. The latest Consumer Price Index data is driving the rally today with the reading showing inflation in the US rose 3.1% in November YoY and 0.1% MoM which was in-line with economists’ expectations and continuing the deflationary trend, which provides support for the Fed to look toward interest rate cuts in the near future as the inflation rate is falling toward the target 2% inflation rate.
The all-important Fed policy meeting also kicks off today ahead of the interest rate decision out tomorrow with the expectation that the Fed will maintain the current cash rate following the release of recent favourable economic data.
Over in Europe, it was a lacklustre session across markets with majority closing slightly lower on Tuesday as investors responded to the latest CPI reading out of the US and other economic data released in the European region. The STOXX600 fell 0.23%, weighed down by the oil and gas sector sliding 1.28%, while Germany’s DAX closed just 0.02% lower, the French CAC fell 0.11% and, in the UK, the FTSE100 ended the day down just 0.03%.
UK unemployment came in at 4.2%, a flat reading on September and below economists’ expectations in a sign the labour market in the UK remains tight.
The ASX extended its December rally into Tuesday’s session with the ASX ending the day up 0.5%, as every sector closed in the green, led by the technology sector after the Nasdaq had a strong day on Wall Steet on Monday. Materials stocks closed flat as the iron ore price dipped on Tuesday.
Australia’s business and consumer confidence data released yesterday came in at mixed readings with business confidence falling -9 points, well below the expected -1 point while consumer confidence rose 2.7% from a decline of 2.6% in November, in a sign consumers are optimistic over the recovering economic conditions.
The story of the week so far has been the response to Sigma Healthcare accepting a transformative merger with Chemist Warehouse to bring the retail pharmacy to the ASX. Fund managers are bullish on the potential backdoor listing for Chemist Warehouse as the $8.8bn deal is awaiting approval from the competition regulator.
What to watch today: