ASX rallies 0.8% ahead of US inflation data

The news: The Australian sharemarket rallied on Tuesday, with forecasts of softening US inflation data buoying investor confidence. The benchmark ASX 200 gained 0.8% to close at 7006.70, with the All Ordinaries gaining 0.9%. The Aussie dollar is trading at 63.7 US cents, up only slightly since yesterday despite a modest overnight rally.

The numbers: Energy stocks led the sharemarket higher, lifting 2.5% with solid gains from Woodside (+3.1%), Santos (+2.9%) and Beach Energy (+5.7%). Materials gained 1.5%, IT stocks closed 1.4% higher while utilities (-1.1%) and communications stocks (-0.8%) finished in the red. Origin gave up 3% while Telstra finished 2% lower cost predictions for an upcoming project leaned to the higher end of guidance.

The context: US inflation data is expected to show headline annual inflation in the world's biggest economy easing from 3.7% to 3.3%, taking a lead from down-trending oil prices. Core inflation, which removes food and fuel price growth, is expected to hold steady. Tomorrow, the ABS will release wage price index data and Seek, Flight Centre and Computershare will hold AGMs.