Australian shares are set to edge higher at the open. US equities rebounded from session lows to end modestly lower after solid economic data dented the probability of further rate cuts this year.<\/p>\n
An upward revision to US economic growth in the second quarter and a decline in claims for jobless benefits led to the probability of a quarter point rate cut at the Federal Reserve\u2019s late October policy meeting falling to 85.5 per cent, from 91.9 per cent the previous day.<\/p>\n
\u201cDespite all the talk of recession in the air, the economy\u2019s path forward looks to be on firm ground with layoffs at normal churn levels, and key business capital equipment expenditures moving to new highs this year despite the tariffs or whether orders are trying to beat the tariffs, it is hard to tell,\u201d FWDBonds\u2019 Chris Rupkey said in a note.<\/p>\n
\u201cFor all the talk of consumer spending being on the soft side at 0.6 per cent in the first quarter and 2.5 per cent in the second quarter, the third quarter could rival consumer expenditures under Biden with spending of 4.0 per cent in Q3 2024 and 3.9 per cent in Q4,\u201d Rupkey also said.<\/p>\n
\u201cIf it ain\u2019t broke, don\u2019t fix it is all we can say as it is clear that the current level of Federal Reserve interest rates is not slowing the economy down and is not hurting the labor market either. If jobs growth is slowing down, it is not the economy that is the problem, it is the Trump 2.0 policies on immigration.\u201d<\/p>\n
Investors already are starting to anticipate the September quarter reporting season.<\/p>\n
\u201cThe rebound in the stock market since this year\u2019s low on April 8 (when it bottomed at 4982.77) has been extraordinary,\u201d Yardeni Research said in a note. \u201cThat\u2019s mainly because the Q1 and Q2 earnings seasons (during April and July) were much better than expected. We are expecting similar \u2018earnings hooks\u2019 (i.e., upturns in the data series as actual results are incorporated) for Q3 and Q4.\u201d<\/p>\n
Market highlights<\/p>\n
ASX 200 futures are pointing up 10 points or 0.1 per cent to 8812.
All US prices near 4.10pm New York time.<\/p>\n
AUD -0.7% to US65.36\u00a2Bitcoin -3.8% to $US109,307On Wall St: Dow -0.4% S&P -0.5% Nasdaq -0.5%VIX +0.62 to 16.80Gold +0.3% to $US3748.06 an ounceBrent oil +0.5% to $US69.64 a barrelIron ore -0.2% to $US105.95 a tonne10-year yield: US 4.17% Australia 4.34%Today\u2019s agenda<\/p>\n
ANZ will release its latest data on NZ consumer confidence, Tokyo will release a September CPI print and late Friday the US will release August personal income, spending and Core PCE reports.<\/p>\n
Vanguard senior economist Josh Hirt: \u201cCore PCE is expected to rise 0.20 per cent month-over-month (2.9 per cent year-over-year) and headline PCE by 0.24% m\/m (2.7% y\/y), in line with consensus estimates. Core goods should be slightly deflationary due to CPI-PCE weighting differences, while Supercore will remain firm, led by transportation and financials.<\/p>\n
\u201cAlthough core goods will be weak this month, this does not mean that tariff pressures are easing \u2013 and we do not expect the Fed to conclude they\u2019re easing either. Tariff passthrough remains gradual, with firms managing costs through inventory, margins, and sourcing shifts.\u201d<\/p>\n
eToro\u2019s Josh Gilbert: \u201cThe Fed appears to be tilting its priority away from purely tackling inflation risks towards paying more attention to the cooling labour market. Even with core inflation still elevated, signs of softer wage growth and easing demand are giving policymakers more room to lower rates.<\/p>\n
\u201cA stronger-than-expected PCE print could delay the timing of rate cuts, but if inflation lands broadly in line with expectations, the Fed will likely feel comfortable with the two rate cuts that have been put on the table this year. That path matters for investors, with rate-sensitive sectors such as tech and real estate poised to benefit most if the Fed proceeds with easing, while a delay could weigh on those areas and support the dollar instead.\u201d<\/p>\n
Top stories<\/p>\n
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