US stocks rallied significantly overnight, inching closer to their record highs set last month. This upward trend was fueled by the latest inflation report, which showed signs of cooling price pressures.
The Dow Jones Industrial Average closed 1.04 per cent higher at 39,765.64. The Nasdaq Composite experienced a more substantial jump of 2.43 per cent, ending the day at 17,187.61. The S&P 500 also saw strong gains, rising 1.68 per cent to 5,434.43. This puts the broad market index just under 5 per cent away from its all-time peak in July.
Turning to US sectors, all sectors closed higher overnight except for Energy. Technology and Consumer Discretionary were the day’s best performers, closing higher by 3 per cent and 2.4 per cent respectively.
In company news, Starbucks shares soared by 24.5 per cent after the coffee giant announced a leadership change, appointing the current CEO of Chipotle as its new chief executive. Home Depot shares dipped initially after forecasting weaker-than-expected sales due to consumer caution, but recovered to close 1.2 per cent higher. Dell Technologies surged 5 per cent as Barclays upgraded the stock, citing a recent pullback and potential undervaluation of its AI prospects.
The producer price index (PPI), which measures wholesale inflation, increased by a modest 0.1 per cent in July. This figure aligned with economists' expectations and suggested a potential slowdown in price increases. Investors were encouraged by this data, as it preceded the highly anticipated consumer price index (CPI) report due out Wednesday morning.
The CPI is expected to show a slight uptick of 0.2 per cent month-over-month, a positive development after a decline in the previous month. Market participants hope this report will provide further clarity and direction after the recent period of heightened volatility.
Market volatility has also eased considerably. The Cboe Volatility Index (VIX) remained below 20 on Tuesday, a stark contrast to its surge above 65 just last week.
Turning to commodities, oil prices declined sharply, halting a five-day rally, as concerns about a potential global oil surplus overshadowed escalating Middle East tension. Investor focus shifted to the IEA's report indicating a potential oil glut and profit-taking contributed to the price drop.
Futures
The SPI futures are pointing to a 0.7 per cent gain.
Currency
One Australian dollar at 7.25am was buying 66.33 US cents.
Commodities
Gold has added 0.15 per cent. Silver has lost 0.79 per cent. Copper has fallen 0.45 per cent. Oil has dropped 2.14 per cent.
Figures around the globe
European markets closed higher. London’s FTSE added 0.30 per cent, Frankfurt gained 0.48 per cent, and Paris closed 0.35 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei jumped 3.45 per cent, Hong Kong’s Hang Seng added 0.36 per cent, while China’s Shanghai Composite closed 0.34 per cent higher.
Yesterday, the Australian share market closed 0.17 per cent higher at 7826.84.
Ex-dividends
Australian Foundation Investment Co (ASX:AFI) is paying 14.5 cents fully franked
Flagship Investments (ASX:FSI) is paying 5.2 cents fully franked
ResMed Inc (ASX:RMD) is paying 5.678 cents unfranked
Dividends payable
Charter Hall Long WALE REIT (ASX:CLW)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.
Disclaimer
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