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Inflationary drivers rising sparked a mixed session on Wall Street overnight as the price of oil and bond yields respectively rose which dampened investor sentiment in equities. The Dow Jones fell 0.2%, the S&P500 edged just 0.02% higher and the Nasdaq rallied 0.22% following a turbulent few session for the tech-heavy index. The benchmark on the 10-year treasury yield hit its highest level since 2007, while the 2-year treasury yield also climbed. Energy stocks were naturally the best performers on Wall St overnight amid the price of oil rising 3%. Inflation remains a key concern in the U.S. with volatility in investor sentiment expected to continue over the coming weeks as further economic data is released.
Over in Europe, markets closed at a 6-month low on Wednesday as investor sentiment in the region continues to be dampened by the state of the global economy, rising interest rates and inflationary concerns. The STOXX600 fell 0.2%, Germany’s DAX lost 0.25%, the French CAC shed 0.03%, and in the UK, the FTSE100 fell 0.43%. Oil and gas stocks did most of the heavy lifting in Europe on Wednesday following that uptick in the price of oil which offset some of the losses among other sectors like insurance stocks.
The RBA’s rate decision headache worsened yesterday after Australia’s CPI monthly indicator data, the key inflation reading for the country, came in at an acceleration to 5.2% for the 12-months to August. While this was in line with economists’ expectations, it is an increase from the 4.9% rise in July and provides further support for the RBA to consider raising rates again or maintaining the cash rate at 4.1% for longer to ensure inflation comes down to the target range of 2-3%. The key drivers of the boosted inflation reading for August were housing, transport, food and non-alcoholic beverages, insurance and financial services. When the RBA meets next week to announce the interest rate decision, the market is currently factoring in just an 11% chance of a rate hike.
The market fell in afternoon trade following the release of CPI data, leading to the ASX200 closing the midweek session down 0.11% weighed down by the tech sector falling nearly 1%. Star Entertainment Group tumbled over 9% after the embattled casino operator raised $565m from institutional investors through offering new shares at 60cps.
At the other end of the market, Tamboran Resources rallied 11.5% after announcing the upgrade of its gas resources to 2 trillion cubic feet at its 100%-owned Beetaloo Basin.
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