ASX and US stocks rebound slightly from inflation shock after investors bought the fall, unemployment rate rises

Australia’s stock market continued to gain after yesterday’s $60 billion midday sell-off as calm returned to Wall Street and more people were employed in August.

The Bureau of Statistics said the national unemployment rate rose a seasonally adjusted 0.1 percentage point to 3.5 percent in August from 3.4 percent in July as more people returned to the job market.

Employers hired 33,000 during the month, reversing a July dip.

Capital Economics said Australia’s first rise in unemployment in 10 months could prompt the Reserve Bank to slow the pace of rate hikes, although economists disagree.

As of 12:30 p.m. AEST, the All Ordinaries was up 0.7 percent to 7,117, while the ASX 200 index was also up 0.7 to 6,877.

The market fell nearly 3 percent yesterday, its biggest percentage drop in three months.

Wall Street on Tuesday posted its biggest losses since 2020 after consumer prices rose in North America last month, sparking fears of steeper interest rate hikes.

makers and makers

During midday, more sectors were higher than lower on the ASX 200.

Energy stocks led gains after a rise in oil prices, banks, mining technology and some consumer stocks.

Education, healthcare and industrials weighed on the market.

The best performers in the ASX 200 Index were coal companies Coronado Global Resources (+8.9%), New Hope (+4.6%) and Whitehaven Coal (+4.3%).

Declining were Miner South 32 (-6.4 percent) and Fletcher Building (-4.5 percent), both trading ex-dividend.

The Australian dollar gained 0.2 percent to 67.61 cents after the release of the jobs data.

my win

Retailer Myer said its annual net income rose nearly 6 percent to $49 million for the year, helped by strong sales growth both in-store and online.

Revenue for the year grew 12.5 percent to nearly $3 billion.

Myer’s chief executive John King said it was the company’s best second-half fiscal year earnings in a decade.

“Despite the general economic uncertainty, we are well positioned with the right value-based offering of affordable and emerging brands,” he said.

Investors will receive a fully franked final dividend of 2.5 cents per share.

Myer shares were down 1.6 percent to $0.63 as of 12:25 p.m. AEST.

Canadian software company Dye and Durham has been given the go-ahead by the Foreign Investment Review Board to take over administration of the Link share register.

However, investment house Morningstar said its acquisition of Link was unlikely given the regulatory issues it is facing in the UK.

Shares in Link rose 0.3 percent after this week’s plunge.

Tyro Payments (-3.8 percent) appointed Jonathan Davey as its new chief executive to replace outgoing boss Robbie Cooke.

Wall Street is gaining ground well

Bargain hunters moved in to buy the slump after Tuesday’s brawl that saw Wall Street post its worst losses since the height of the coronavirus pandemic in 2020.

All three major Wall Street indices had a volatile session but ended higher.

“Today is a licking day after taking body hits yesterday,” said Ryan Detrick, chief market strategist at Carson Group in the US.

“The inflation debate continues and yesterday was a harsh reminder that this is an uphill battle and the Fed must remain aggressive to bring the widespread inflationary prices we are seeing under control.”

Energy stocks were the best performers in the Dow Jones Industrial Average after oil prices rose overnight.

At the close, the Dow Jones index was up 0.1 percent to 31,135, the S&P 500 was up 0.3 percent and the Nasdaq Composite was up 0.7 percent to 11,720.

US wholesale prices down

US producer prices fell for the second straight month in August as gasoline costs continued to fall and commodity prices fell.

The producer price index for final demand fell 0.1 percent last month after falling 0.4 percent in July.

This is the first consecutive decline since 2020.

However, core inflation, which excludes volatile elements such as food and energy prices, rose 0.4 percent over the month, up from 0.2 percent in July.

The cost of services rose 0.4 percent in August, mainly due to higher margins at wholesalers and retailers and a shortage of workers.

For the year, the PPI rose 8.7 percent, compared to a 9.8 percent increase in July.

“It’s highly likely that retail prices will ease at least somewhat in line with the PPI, and that should bring some relief to Fed officials after the still high, but not unexpectedly strong PPI reading,” said Andrew Hollenhorst, US chief economist at Citigroup .

ANZ economists said the PPI figures “did nothing to allay fears that the Fed will need to hike significantly further if it is to meet its inflationary mandate”.

The market expects the Federal Reserve to hike interest rates by 0.75 percent next week.

However, the likelihood of a 1% interest rate hike to curb inflation is rising after consumer inflation rose 0.1% in August and prices for groceries, rent and medical supplies soared.

UK inflation is easing

While US consumer inflation rose in August, UK retail prices slipped to 9.9% over the year from a 40-year high of 10.1% in July on lower fuel prices.

However, core inflation, which excludes volatile food and energy prices, picked up, with food prices rising for the 13th straight month.

US inflation for the year was 8.3 percent, still lower than the UK.

European stocks fell on US consumer price hikes and fears of more interest rate hikes.

In London, the FTSE 100 index fell 1.5 percent to 7,277, Germany’s DAX fell 1.2 percent to 13,028 and the CAC 40 in Paris fell 0.4 percent to 6,222.

The International Energy Agency said global demand for oil is expected to grind to a halt later in the year as the global economic slowdown deepens.

However, the agency expects fuel demand to recover over the next year.

Oil prices rose after US inventories fell to their lowest level since 1984 and amid threats of US rail strikes.

The Biden administration is considering replenishing its strategic oil reserves if West Texas crude falls below $80 a barrel.

Brent crude rose 1.5 percent to $94.52 a barrel, while spot gold fell 0.3 percent to $1695.74 an ounce.

ABC/Reuters

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