Aussie stocks are in for another green run after US indices broadly embraced November’s Consumer Price Index (CPI) data.
Benchmark futures suggest the ASX 200 will jump 16 points at the open, kicking off the day with a 0.22% lead.
What’s new on Wall Street?
Major US indices roared into the green overnight as cooler-than-expected November inflation data buoyed New York markets.
However, the benchmarks pared back the wins in early afternoon trade, with only the Nasdaq finishing up more than 1%.
The train shows no sign of slowing down — now, investors' ears will be pricked for the Fed's interest rate decision, expected in the early hours of Thursday morning local time.
Commenting on the November CPI readout, eToro US investment analyst Callie Cox said inflation was slowing down dramatically, which showed the Fed’s medicine was working and the world was getting back to normal.
“That’s great news, especially since we’re still seeing a surprisingly strong job market,” she explained.
“What we’re in now is the definition of a soft landing. Slowing price growth could show the Fed that it may be time to take the foot off the brake.”
Even so, Cox said a spike in services inflation could give the Fed some pause in declaring this report a victory.
“The Fed has more control over services prices, so fiery hot services inflation could hint that Powell needs the economy to cool down more.
“This report could be the good news the market has needed to build a foundation just above the lows. But investors need to be careful.
“Inflation still isn’t fully handled and it’s easy for markets to get carried away. We may not see new highs until inflation is fully under control.”
US president Joe Biden weighed in on the readout, stating most Americans could see the progress among declining gas prices.
“Make no mistake — prices are still too high. We have a lot more work to do. But things are getting better, headed in the right direction.”
Americans can see our economic progress while driving down the street, finding relief at the pump as gas prices fall.
As they get ready for holiday celebrations and dinners, food inflation is slowing.
These savings are crucial for so many families.
— President Biden (@POTUS) December 13, 2022
Commodities and currency
Crude oil prices continue to reverse the volatility seen in recent weeks, jumping nearly 6% over the last two sessions.
The gains come despite caution from OPEC, which kept its demand forecasts unchanged in its latest monthly report.
“The year 2023 is expected to remain surrounded by many uncertainties, mandating vigilance and caution,” the export coalition warned.
Meanwhile, gold got back on the bandwagon overnight, rallying to reach near-six-month highs. One ounce of the precious metal is currently up 1.7% to US$1,822.8.
Copper also surged, jumping 1.2% to US$3.85 a pound, while iron ore subdued to a 0.3% loss, fetching US$108.20 a tonne.
US paper and bond yields dropped sharply overnight in good news for local currency. The Aussie dollar jumped 1.58% against the greenback to fetch nearly 69 US cents.
Cryptocurrency, however, is in murky waters — exchanges were rocked overnight as FTX founder Sam Bankman-Fried was charged with wire fraud, money laundering and conspiracy to commit fraud on the United States, among others.
Crypto exchanges like Binance are experiencing heavy withdraws, with research firm Nansen reporting the firm amassed US$2 billion in outflows in the last 24 hours.
We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.
I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. ????
— CZ ???? Binance (@cz_binance) December 13, 2022
On the ASX
In boardroom news today, Westpac chair John McFarlane has announced his retirement from the role. He’ll step down roughly a year from now at the company’s 2023 AGM.
“This delivers on my commitment to shareholders when I first took on the role in 2020 to create a leaner, more agile, and better-performing company,” McFarlane told investors this morning.
“It also ensures the board has time to appoint a new chair in an orderly way.”
In other news, WA energy player Santos has struck up a new gas supply agreement with the Walyering joint venture in the Perth Basin.
Starting mid-next year, Santos is poised to pick up 36.5 petajoules of Walyering gas over a five-year period to fuel its domestic sales portfolio.