ASX futures up 20 points or 0.27% to 7234 around 7.00am AEDT, suggesting a gain at the open.
After the CPI report, U.S. stocks surrendered most of their gains Tuesday morning later in the afternoon. The S&P 500, which added as much as 2.8 percent on the day, was up 0.7 percent near the end of trading. The tech-heavy Nasdaq Composite, meanwhile, lost a 3.8% gain to trade 1% higher instead.
US indices were negative as investors wait for the Federal Reserve’s next interest rate decision tomorrow and a half-point interest-rate hike is in the price.
In commodities, Brent crude oil rose 3.56 per cent to $US80.77 a barrel and gold rose 1.65% to US$1,810.89.
In local bonds, the yield on 2 year Australian government notes put on 3.1%, and the yield on 10 year notes lifted to 3.40%. Foreign debt: The yield on 2 Year US Treasury notes edged lower to 4.23% while the yield on 10 Year US Treasury notes declined to 3.5%.
The Australian dollar rose to 68.59 US cents from 67.45. The Wall Street Journal Dollar Index, which measures the U.S. currency against 16 others, was recently down 0.2% at 97.00.
Asia
Chinese stocks ended lower as the market retreated further from the rebound in the previous session propelled by the reopening of the country. The market was weighed down by software companies and chip makers. Yonyou Network Technology dropped 3.0% and Jinko Solar fell 5.6%. Gainers included stocks of companies in the transportation sector. Beijing Shanghai High Speed Railway Co. added 3.1% to reverse last week’s decline, while Air China Ltd. surged 4.5%. The Shanghai Composite Index dropped 0.1 percent to 3176.33, the Shenzhen Composite Index lost 0.6 percent and the ChiNext Price Index ended off 1.1 percent.
Hong Kong shares finished little changed, as a rally fueled by optimism about China’s reopening persisted. The Hang Seng Index gained 0.7% to close at 19596.20. Chip makers and technology names were among the biggest gainers, including Hua Hong Semiconductor, which rose 17.4%, and Semiconductor Manufacturing International Corp., which added 9.4%. The Hang Seng Tech Index rose 0.7 percent, led higher by shares of Meituan and Kuaishou, which gained 2.0 percent and 4.5 percent, respectively. Pharmaceutical stocks fell hardest, led by Chinese vaccine producer CanSino Biologics, which slumped 6.9 percent, and the Shanghai Fosun Pharmaceutical, which lost 2.4 percent.
Stocks Japanese shares closed higher, driven by gains made by pharmaceutical and shipping companies and on continued hopes that the Fed may taper more gradually. Takeda Pharmaceutical rose 2.7 percent and Nippon Yusen added 2.2 percent. The Nikkei Stock Average added 0.4% to 27954.85.
Europe
European stocks ended higher as investors digested data which revealed that US inflation fell more than expected in November. The pan-European Stoxx Europe 600 was 1.3 percent higher, the British FTSE 100 was up 0.8 percent, the German DAX gained 1.3 percent and the French CAC 40 climbed 1.4 percent. US inflation slowed to 7.1 percent on an annual basis in November after 7.7 percent in October, below expectations of 7.3 percent in a WSJ poll of analysts. That “has given a lift to those who think that the Federal Reserve may not need to be as aggressive, or go as far as in the rate hike cycle as we head into 2023,” Michael Hewson, analyst at CMC Markets, wrote. The Fed’s next interest rate decision is tomorrow.
North America
U.S. stocks lost most of their Tuesday morning gains after the CPI data came out later in the afternoon. The S&P 500, up 2.8 percent at one point, was 0.7 percent higher near the end of trading. The tech-heavy Nasdaq Composite, meanwhile, turned a 3.8% gain into 1% advance.
US indices were volatile as investors positioned themselves ahead of the Federal Reserve’s interest rate announcement tomorrow, with a half-percentage-point increase already largely priced in.
“The Fed is still very much going to look through the imbalance in labor markets, the dovish pivot is still a long way off and in the meantime companies and consumers need to reset to the impact of higher interest rates and a slowing economy,” wrote Yung-Yu Ma, chief investment strategist at BMO Wealth Management, in a note Tuesday.
Markets will continue to be “choppy” in the near term, but an improving inflation backdrop will give a positive bias, Mr. Ma said.
