ASX and Australian dollar rise following a fall in US inflation | Finance Report

Summary

US inflation is nearing the Federal Reserve's 2% target, with headline inflation at 2.5% and core inflation steady at 3.2%. Despite housing costs remaining high, a rate cut of 0.25% is expected next week. Markets reacted positively to the CPI decline, with S&P 500 up 1% and NASDAQ up 2%. Trump Media & Technology Group's stock slumped post-debate, and Taylor Swift's endorsement of Kamala Harris confused investors. Australian market rose 1%, with banks and miners leading gains, while Nine Entertainment shares fell after CEO resignation. Commodities like iron, oil, and copper rose, gold fell, and the Australian dollar strengthened against the weakening US dollar.

Takeaways

• 📉 Inflation in America is nearing the Federal Reserve's target of 2%, with headline inflation at 2.5% and core inflation steady at 3.2%.
• 🏠 The main issue with inflation in America remains housing, with 'Shelter inflation', primarily rent, still above 5%.
• 📉 A US rate cut of 0.25% is expected next week, but it's not anticipated to be a significant reduction.
• 📈 The decline in headline CPI was positively received by the markets, leading to a 1% rise in the S&P 500, a 2% rise in the NASDAQ, and a 3.5% rise in the Nikkei in Japan.
• 📉 Trump Media and Technology Group's stock price slumped after a debate, reflecting uncertainty about its future if Trump were to win the election.
• 📉 Australian market saw a 1% increase, driven by gains in banks and miners.
• 📉 Nine Entertainment shares fell significantly following the resignation of CEO Mike Sneesby.
• 📉 Since April 2021, Nine Entertainment's stock has fallen by 58%, which is not typically conducive to CEO longevity.
• 📈 Commodity prices for iron, oil, and copper increased, while gold prices fell.
• 📈 The Australian dollar appreciated as the US dollar weakened.

Q & A

What is the current status of inflation in America according to the transcript?

Inflation in America is not yet back to the Federal Reserve's target of 2%, but it is close. Headline inflation has decreased to 2.5%, and core inflation, which excludes food and energy, remains steady at 3.2%.

What is the expected action by the Federal Reserve regarding interest rates in the transcript?

A rate cut by the Federal Reserve is anticipated for the following week, but it is expected to be a modest 0.25% rather than a significant reduction.

What is the issue with inflation in the housing sector as mentioned in the transcript?

The issue with inflation in the housing sector, also known as Shelter inflation, is that rent prices are still above 5%, which is higher than the overall core inflation rate.

How did the decline in headline CPI affect the stock market as per the transcript?

The decline in headline CPI was well received by the markets, leading to a 1% rise in the S&P 500, a 2% rise in the NASDAQ, and a 3.5% rise in the Nikkei in Japan.

What happened with Trump Media and Technology Group's stock as described in the transcript?

The stock of Trump Media and Technology Group, which is associated with former President Trump's social media platform called TRUTH Social, slumped after a debate, indicating a potential decrease in confidence if Trump were to win the election.

What was the impact of Taylor Swift's endorsement of Kamala Harris on the US market as mentioned in the transcript?

The transcript suggests that investors were uncertain about the impact of Taylor Swift's endorsement of Kamala Harris on the Republican candidate, but it did not specify any direct market impact.

What happened in the Australian market as described in the transcript?

The Australian market experienced a 1% increase, with solid gains by banks and miners.

Why did Nine Entertainment shares fall significantly as mentioned in the transcript?

Nine Entertainment shares fell significantly following the resignation of CEO Mike Sneesby. The transcript notes that such a decline is not unusual for this stock, especially considering it has fallen 58% since Mr. Sneesby took over in April 2021.

How did commodity prices change in the market as per the transcript?

Iron, oil, and copper prices went up, while gold prices fell.

What happened to the Australian dollar in relation to the US dollar as mentioned in the transcript?

The Australian dollar increased in value because the US dollar fell.