ASX set to rise as Wall Street advances on inflation boost; $A weaker
US stocks are drifting near their record after a report suggested President Donald Trump's tariffs are not pushing inflation much higher, at least not yet.
The S&P 500 was up 0.2 per cent in afternoon trading and is just 1.6 per cent below its all-time high set in February. The Dow Jones was up 204 points, or 0.5 per cent, and the Nasdaq composite was 0.1 per cent higher. The Australian sharemarket is set to rise, with futures at 5am AEST pointing to a gain of 15 points, or 0.2 per cent, at the open. The ASX edged higher by 0.1 per cent on Wednesday.
The Australian dollar weakened. It was 0.3 per cent lower at 65.02 US cents at 5.18am AEST.
The action was a bit stronger in the bond market, where Treasury yields eased after a report showed inflation ticked up by less last month than economists expected. US consumers had to pay prices that were 2.4 per cent higher overall in May than a year earlier. That was up from April's 2.3 per cent inflation rate, but it wasn't as bad as the 2.5 per cent that Wall Street was expecting.
A fear has been that Trump's wide-ranging tariffs could ignite another acceleration in inflation, just when it had seemed to get nearly all the way back to the Federal Reserve's 2 per cent target from more than 9 per cent at its peak three summers ago.
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It hasn't happened, though economists warn it may take months more to feel the full effect of Trump's tariffs. For the time being, many businesses may be pulling products they already had in their inventories rather than passing along higher costs from fresh imports.
'Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remain,' according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Financial markets also had only modest reactions to the conclusion of two days of trade talks between the United States and China in London.
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Herald Sun
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- Herald Sun
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