Stan Choe
The US stock market is ticking toward an all-time high following the latest sign that inflation is getting less bad. Stocks also got a lift from easing oil prices in their latest yo-yo move.
The S&P 500 climbed 0.6 per cent and was on track to top its record set last week. The Dow Jones Industrial Average was up 22 points, or less than 0.1 per cent, in mid-afternoon trade, and the Nasdaq composite was 0.7 per cent higher.
The Australian sharemarket is set to slide, with futures at 4.52am AEST pointing to a loss of 35 points, or 0.4 per cent, at the open. The ASX lost 0.2 per cent on Thursday. The AUstralian dollar was steady at US70.53¢.
Wall Street relaxed after a report showed prices at the US wholesale level were 4.7 per cent higher last month than a year earlier. While that’s still very high, it’s not as bad as June’s 5.5 per cent inflation rate at the wholesale level, and it was slightly better than economists expected.
If inflation continues to trend that way, the Federal Reserve could decide to hold off on hikes to interest rates. Higher rates would help keep a lid on inflation, but they do so by intentionally slowing the economy and making it more expensive for everyone to borrow money.
Fed officials are split on whether they should have already begun hiking interest rates. But Thursday’s report, following a similar update on inflation at the US consumer level the day before, has traders now betting on just a 37 per cent chance that the Fed will raise rates at its next meeting in September. That’s down from the roughly 50 per cent probability seen two days ago, according to data from CME Group.
Any increase by the Fed would be the first in more than three years. It also could anger President Donald Trump, who has been lobbying for lower interest rates.
Treasury yields sank in the bond market, which eases pressure on stocks and other investments. The yield on the 10-year Treasury fell to 4.64 per cent from 4.68 per cent late Wednesday and from 4.72 per cent on Monday, though it’s still well above its 3.97 per cent level from before the war with Iran sent oil and gasoline prices surging.
Oil prices eased back on Thursday, helping to limit worries about inflation. The price for a barrel of Brent crude oil fell 1.4 per cent to $US87.71.
It’s been swinging sharply recently and pinballed between $US72 and $US102 last month as hopes rose and fell that a deal in the war could allow oil tankers to freely exit the Middle East again and deliver crude worldwide.
On Wall Street, stocks in the real-estate industry helped lead the way. When interest rates are lower and bonds are paying less in yield, the dividends that many real-estate investment trusts pay look more attractive. Lower mortgage rates could also drive more activity in the housing market.
AvalonBay Communities, which owns apartments across the country, rose 2.3 per cent. Builders FirstSource, which sells countertops and other building materials, added 1.7 per cent.
Fossil Group rose 4.7 per cent after the seller of watches and jewellery became one of the latest companies to report better results for the latest quarter than analysts expected. Such reports have helped drive Wall Street to its records because stocks tend to track the path of corporate profits over the long term.
They helped offset a drop for Cisco Systems, which fell 8.9 per cent even though the tech giant reported stronger profit and revenue for the latest quarter than Wall Street expected. Analysts said investors may be worried about its profit margins going forward, and its stock has been shaky through the summer amid worries that AI-related stocks in general shot too high.
In stock markets abroad, indexes were mostly lower in Europe and mixed in Asia. South Korea’s Kospi again had one of the world’s biggest moves and jumped 3.6 per cent. Seoul has been home to the world’s sharpest swings for artificial-intelligence stocks because it’s dominated by two tech giants, Samsung Electronics and SK Hynix.
AP
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