Wall Street experienced a boost on Friday, with all three major indices posting gains following the release of positive inflation data. This development comes as the ASX 200 is poised to open the week on a positive note, reflecting a global shift towards a “risk back-on” sentiment.
Meanwhile, Australian telecommunications provider Optus has confirmed another outage affecting its customers. This time, a failure at a mobile tower in Dapto, a suburb in southern Sydney, disrupted services for about 4,500 customers over the weekend. The outage, which occurred between 3 a.m. and 12:20 p.m. yesterday, interrupted at least 12 emergency triple-0 calls.
Federal Budget Deficit Narrows
In a separate economic update, the Australian Federal Budget deficit has been reported at a slimmer-than-expected A$10 billion for the fiscal year ending June 2025. This figure, representing approximately 0.4% of the gross domestic product, is significantly lower than the A$27.9 billion deficit forecast earlier this year by the Treasury and Finance Department.
The improvement in the budget position is attributed to banking revenue upgrades, though it marks the end of a two-year period of budget surpluses. Treasurer Jim Chalmers and Finance Minister Katy Gallagher are expected to provide further details on the final budget position later today.
Wall Street and Global Markets Overview
Wall Street’s performance on Friday saw the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite gain 0.6%, 0.7%, and 0.4% respectively. Despite these gains, the indices were unable to end the week in positive territory, with the S&P 500 slipping 0.3% and the Nasdaq down 0.7% over the week.
European markets fared better, with the Eurostoxx index rising 0.8% for the session and 0.5% for the week. The ASX 200 is expected to follow suit, with futures trading indicating a 0.2% gain at the opening. Last week, the ASX recorded a 0.2% increase, marking its first gain in three weeks.
Inflation Data and Economic Implications
The key economic news on Friday was the release of US inflation data. The Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) index for August, rose 0.3% month-on-month and 2.7% year-on-year, aligning with market expectations. Additionally, consumer spending exceeded forecasts, suggesting resilience in the US economy.
However, Richmond Fed Bank President Thomas Barkin expressed skepticism about the inflation forecasts, citing ongoing tariff impacts on the economy. The potential for a government shutdown adds further uncertainty, potentially affecting the release of key employment data this week.
“The one bright spot was that income and spending were a little bit firmer than expected, which means the consumer isn’t falling off a cliff as the market was expecting,” said Gennadiy Goldberg, head of US rates strategy at TD Securities, to Reuters.
Commodity Markets: Gold and Oil
In the commodities market, gold prices, which typically benefit from lower interest rates, maintained recent gains, approaching $US3,800 per ounce. Meanwhile, oil prices rose following Ukrainian drone attacks on Russian infrastructure, which disrupted the major energy producer’s exports. Brent crude, the global benchmark, increased by 1% to $US70.13 per barrel.
As the new week begins, the ASX 200 appears set to capitalize on the positive sentiment, with futures trading suggesting a modest gain. Investors and market analysts will be closely monitoring developments both domestically and internationally, as economic indicators continue to shape market dynamics.
