ASX & US Stocks Recover Slightly From Inflation Hit After Investors Buy Dip, Jobless Rate Rises

A man in his-vis gear walks past an ASX share price board.

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The Australian stock market has made fresh midday gains after yesterday’s $60bn sell-off as calm returned to Wall Street and more people were employed in August.

The Statistics Bureau said the national jobless rate rose 0.1 percentage point to 3.5 percent in August from 3.4 percent in July, on a seasonally adjusted basis, as more people returned to the workforce.

Employers hired 33,000 people during the month, reversing a drop in July.

Capital Economics said Australia’s first rise in unemployment in 10 months may prompt the Reserve Bank to slow its rate hike, though economists disagree.

At 12:30pm AEST, All Ordinaries were up 0.7 percent at 7,117, while the ASX 200 Index was also up 0.7 percent at 6,877.

The market fell nearly 3 percent yesterday, the biggest percentage drop in three months.

Wall Street on Tuesday saw its biggest losses since 2020 after consumer prices rose in North America last month, sparking fears of steeper interest rate hikes.

Motors and agitators

More sectors were higher than lower on the ASX 200 during the lunch hour.

Energy stocks led gains after a surge in oil prices, banks, mining technology and some consumer stocks.

Education, health and industrial companies weighed on the market.

The best performers in the ASX 200 index were coal companies Coronado Global Resources (+8.9 percent), New Hope (+4.6 percent) and Whitehaven Coal (+4.3 percent).

Lower Miner South 32 (-6.4 percent) and Fletcher Building (-4.5 percent), which traded without dividends.

The Australian dollar gained further after the jobs data came out, up 0.2 percent at 67.61 cents on the dollar.

my gain

Retailer Myer said its annual net profit rose nearly 6 percent over the year to $49 million, helped by strong sales growth both in stores and online.

Sales increased 12.5 percent for the year to nearly $3 billion.

Myer Chief Executive John King said it was the best earnings result for the second half of the fiscal year for the company in a decade.

“Despite the broader economic uncertainty, we are well placed with the right value-based proposition of affordable and aspirational brands,” he said.

Investors get a final fully paid dividend of 2.5 cents per share.

Myer’s shares fell 1.6 percent to $0.63 at 12:25pm AEST.

Canadian software firm Dye and Durham has gotten the go-ahead from the Foreign Investment Review Board to take over the share registry’s Link Administration.

However, investment house Morningstar said a purchase of Link was unlikely due to regulatory problems it faces in the UK.

Link’s shares rose 0.3 percent after this week’s slide.

Tyro Payments (-3.8 percent) named Jonathan Davey as its new CEO to replace outgoing boss Robbie Cooke.

Wall Street regains ground

Bargain-hunting investors moved to buy the dip after Tuesday’s pummeling that saw Wall Street post its worst losses since the height of the coronavirus pandemic in 2020.

All three major Wall Street indices had a volatile session but ended higher.

“Today is a day to lick your wounds, after taking body shots yesterday,” said Ryan Detrick, chief US market strategist at Carson Group.

“The inflation debate continues and yesterday was a stark reminder that this is an uphill battle and that the Fed must remain aggressive to put a cap on the broad-based inflation we are seeing.”

Energy stocks outperformed the Dow Jones Industrial Average after an overnight surge in oil prices.

At the close, the Dow Jones Industrial Average was up 0.1 percent at 31,135, the S&P 500 was up 0.3 percent and the Nasdaq Composite was up 0.7 percent at 11,720.

US wholesale prices down

US producer prices fell for the second consecutive month in August, as the cost of gasoline fell further and the price of goods fell.

The producer price index for final demand fell 0.1 percent last month, after falling 0.4 percent in July.

That is the first consecutive drop since 2020.

However, core inflation, which strips out volatile items such as food and energy prices, rose 0.4 percent during the month, up from 0.2 percent in July.

The cost of services increased 0.4% in August, mainly due to the higher margins received by wholesalers and retailers and the shortage of workers.

During the year, the PPI increased 8.7 percent, compared to a 9.8 percent increase in July.

“Retail commodity prices will most likely at least soften a bit in line with the PPI and that should give Fed officials a breath of relief after the still high but not unexpected PPI reading.” strong,” said Andrew Hollenhorst, chief US economist at Citigroup. .

ANZ economists said the PPI figures “did nothing to allay fears that the Fed will need to raise considerably more if it wants to deliver on its inflation mandate.”

The market expects the US central bank to raise official interest rates next week by 0.75 percent.

However, the odds of a 1 percent rate hike to curb inflation are increasing after consumer inflation rose 0.1 percent in August on rising food prices, rents and medical care.

UK inflation moderates

While consumer inflation rose in the US in August, UK retail prices fell over the year to 9.9 percent from a 40-year high of 10.1 percent in July, due to to a drop in gasoline prices.

However, core inflation, which excludes volatile food and energy prices, rose, with food prices rising for the 13th month in a row.

US inflation stood at 8.3 percent for the year, even lower than in the UK.

European stocks fell on rising consumer prices in the US and fears of steeper increases in interest rates.

In London, the FTSE 100 Index fell 1.5 percent to 7,277, Germany’s DAX lost 1.2 percent to 13,028 and the Paris CAC 40 fell 0.4 percent to 6,222.

The International Energy Agency said global oil demand is expected to stall later in the year as the global economic slowdown deepens.

However, the agency believes that fuel demand will recover next year.

Oil prices rose after US inventories fell to the lowest level since 1984 and amid threats of US rail strikes.

The Biden administration is considering refilling its strategic oil reserve if West Texas crude drops below $80 a barrel.

Brent crude rose 1.5 percent to $94.52 a barrel, while spot gold fell 0.3 percent to $1,695.74 an ounce.

ABC/Reuters

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