Australian shares are poised for an uplift, tracking the broad gains seen in New York markets. This optimistic outlook is fueled by recent data from June retail sales, which bolstered confidence in the robustness of the US economy. The data also strengthens the Federal Reserve’s position to maintain current interest rates.
The S&P 500 closed at a record high of 6,297.36, buoyed by strong corporate earnings. Meanwhile, the Nasdaq Composite also reached a new peak at 20,884.27, driven by a rally in tech stocks.
US Retail Sales Surge
Retail sales in the United States saw a 0.6% increase in June, rebounding from a 0.9% decline in May, according to the US Commerce Department’s Census Bureau. This figure surpassed economists’ expectations, who had predicted a modest 0.1% rise. The data, which primarily reflects goods and is not adjusted for inflation, suggests a resilient consumer sector.
“The June report confirms consumers were still willing to spend through the second quarter, but we expect a slowdown from here,” said Michael Gapen of Morgan Stanley.
Gapen further noted that signs of tariff impacts were evident in the June Consumer Price Index (CPI), with acceleration across core goods categories, although car prices remained down. He anticipates inflation to peak in August, with a consequential slowdown in real consumer spending growth expected in the latter half of the year.
Tech Stocks and Market Dynamics
The tech sector received a boost following a positive outlook from Taiwan Semiconductor Manufacturing, which reinforced confidence in artificial intelligence spending. Nvidia’s shares rose by over 1%, pushing its market capitalization towards $US4.25 trillion, marking a 20% increase over the past month.
The NYSE Fang+ Index extended its recovery from early April lows, now up by 45%. This resurgence underscores the tech sector’s pivotal role in the broader market rally.
Market Highlights
- ASX futures indicate a rise of 35 points or 0.4% to 8,653.
- All US prices are noted as of 5pm New York time.
- AUD declined by 0.6% to US64.88¢.
- Bitcoin decreased by 0.4% to $US119,490.
- On Wall Street: Dow +0.5%, S&P +0.5%, Nasdaq +0.7%.
- VIX fell by 0.64 to 16.52.
- Gold dropped by 0.3% to $US3,338.92 an ounce.
- Brent oil increased by 1.6% to $US69.59 a barrel.
- Iron ore rose by 1.2% to $US101.40 a tonne.
- 10-year yield: US 4.45%, Australia 4.34%.
Looking Ahead
Today’s agenda includes BHP’s quarterly operational review, set for release at approximately 8:30 am Melbourne time. Additionally, Japan will publish its national June CPI, while the US is scheduled to report on June housing starts and the University of Michigan’s initial June sentiment reading at 10:30 pm.
In other news, significant developments are unfolding in Australian politics and business. Labor may consider forgiving $1.1 billion in welfare debt following a landmark court ruling. Meanwhile, Prime Minister Anthony Albanese’s diplomatic visit to China has sparked debate, and Crown Resorts is in discussions to potentially replace Star Entertainment in Brisbane’s casino operations.
As markets continue to react to these developments, investors and analysts will be closely monitoring economic indicators and corporate earnings for further insights into the global economic trajectory.
