Australian shares to climb after Wall St gains on bank profits, falling US prices
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The news: The Australian sharemarket is set to open higher after Wall Street advanced overnight as strong bank earnings and a cooler-than-expected inflation report lifted risk appetite despite rising tensions in the Middle East.
The numbers: Updated at 7:55am AEST:
- ASX futures: up 49 points to 8,817 points
- Wall Street: Dow Jones up 0.02%, S&P 500 up 0.38%, Nasdaq up 0.90%
- Europe: FTSE 100 up 0.30%, CAC 40 up 0.03%, DAX up 0.60%
- Spot gold: up 1.31% to USD4,054 per ounce
- Oil prices: Brent up 0.99% to USD84.12/barrel, US WTI up 2.10% to USD79.77/bbl
- AUD: up 0.76% at 69.71US cents
- Bitcoin: up 3.85% to USD64,623.
The context: All three major US indices closed higher on Tuesday after major banks delivered stronger-than-expected earnings. JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Wells Fargo collectively reported more than USD49 billion ($70.3 billion) in profit, up 39% from a year earlier, according to WSJ, while combined revenue rose by more than a fifth as trading and dealmaking activity drove record results.
On the data front, US consumer prices fell 0.4% in June, the first monthly decline in six years, as lower fuel costs during the Iran ceasefire weighed on inflation. Annual inflation eased to 3.5% from 4.2%, below the 3.8% forecast in an economists poll by the WSJ. However, Federal Reserve Chair Kevin Warsh told lawmakers on Tuesday (ET) the central bank had “no tolerance” for persistently elevated inflation and cautioned against reading too much into a single CPI report.
Markets scaled back expectations of a Federal Reserve rate hike this month, with CME data showing the probability falling to about 17%, from 42% a day earlier.
Elsewhere, US President Donald Trump abandoned plans to impose a 20% levy on cargo shipments through the Strait of Hormuz after US allies in the Gulf urged him to drop it, saying the expected revenue would instead come from planned direct investment by Gulf states.
However, Trump said the US would maintain its blockade on Iranian shipping, while American forces launched a fourth consecutive night of strikes on Iran.
