Stocks on both sides of the Atlantic were stronger after US inflation figures kept hopes alive that the Federal Reserve will start juicing the world’s biggest economy with lower interest rates soon.
Meanwhile, US airlines rallied as the inflation data showed a recovery in pricing power for carriers, with United Airlines, American Airlines and Delta Air Lines all taking off in late trading.
Google-parent Alphabet advanced after artificial intelligence startup PerplexityAI lobbed in a surprise US$34.5 billion all-cash bid for the Chrome browser.
And Australian futures are pointing to a positive start for the ASX when trading opens today, with heavyweight Commonwealth Bank – parent of the local ASB Bank – poised to report earnings.
A loosening awaits?
US Labor Department figures showed consumer prices rose an annual 2.7% in July, a touch softer than economists expected, keeping alive expectations the Federal Reserve will resume rate cuts sooner rather than later.
“Digging into the weeds of the report, the pass-through of tariffs into goods prices was less than expected, with goods prices ex autos rising by just 0.2% month on month and Pantheon Macroeconomics noted a lack of correlation between import concentration of goods items and inflation, unlike last month,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “This could indicate that firms rather than consumers are absorbing the full force of the tariffs.”
The prospect of lower interest rates fuelled demand for stocks on both sides of the Atlantic, with Wall Street’s S&P 500 up 1% in late trading, while the UK’s FTSE 100 advanced 0.2% and France’s CAC 40 gained 0.7%.
Among the leaders on the Dow Jones Industrial Average were UnitedHealth Group, Goldman Sachs, and Boeing Co. US President Donald Trump had some choice words for Goldmans on his Truth Social account, calling for chief executive David Solomon to find a new chief economist over the research unit’s predictions the US tariff regime would stoke inflation.
Flying high
Meanwhile, the US inflation data showed airline prices rose 4%in July, reversing a 0.1% dip in June and buoying shares of airlines. United Airlines climbed 10% in late trading, while American Airlines was up 11% and Delta Air Lines gained 8.9%.
Across the Atlantic, Germany’s TUI AG advanced 3.5% after raising earnings guidance on a record performance for its hotels and resorts, and cruise divisions.
Alphabet rose after PerplexityAI lobbed in an unexpected US$34.5 billion all-cash bid for Google Chrome, coming at a time while the search engine giant’s future has an antitrust cloud hanging over its head, while Apple nudged up after Elon Musk threatened to sue the iPhone maker on behalf of his xAI startup, accusing the tech firm of breaching antitrust rules by favouring OpenAI in the App store rankings.
The buoyant mood is set to continue in the antipodes, with Australian futures pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman. The kiwi traded at 59.55 US cents at 7am in Auckland from 59.39 cents yesterday.
The domestic earnings season continues with all eyes on Commonwealth Bank of Australia’s annual result due today, having flagged A$130 million of provisions on restructuring and remediation costs earlier this month.
The Reserve Bank of Australia cut its target cash rate a quarter-point to 3.6% as expected yesterday, and attention is turning to New Zealand’s central bank review next week, which is expected to deliver a similar sized reduction, taking the official cash rate to 3%.
Bank of New Zealand today lowered various fixed term home loan rates by between 6 and 20 basis points in anticipation of the OCR being cut.
On the NZX, Vital Healthcare Property Trust’s earnings are due and My Food Bag is holding its annual meeting in Auckland, while Statistics New Zealand will release electronic card spending for July.
