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Aussie stocks were set to open cautiously higher after the Dow and S&P 500 rallied on signs of inflation cooling from red-hot levels.

ASX futures rose ten points or 0.13 per cent ahead of the biggest day of the full-year reporting season so far. Updates are scheduled today from index heavyweights Telstra, Goodman, NAB and ANZ (more below).

The S&P/ASX 200 closed 22 points or 0.29 per cent higher yesterday at a fresh record following a well-received update from Commonwealth Bank.

Overnight, oil, iron ore, copper and gold advanced. The dollar rallied almost half a cent.

Wall Street

US stocks closed mixed but mostly higher as core inflation rose less than economists expected. The report soothed concerns the Federal Reserve might be forced to raise official rates sooner than the market has priced in.  

The Dow Jones Industrial Average climbed 220 points or 0.62 per cent to a new high. The S&P 500 rose 11 points or 0.25 per cent, also ending at a record. The Nasdaq Composite slipped 23 points or 0.16 per cent as investors favoured cyclicals over growth stocks.

The consumer price index increased 0.5 per cent last month, slowing from growth of 0.9 per cent in June. The month-on-month decline was the sharpest in 15 months. Annual headline growth was 5.4 per cent, broadly in line with expectations.

“As far as the equity market’s concerned, it’s a positive number,” Steven Ricchiuto, US chief economist at Mizuho Securities, told Reuters.

Core inflation – the measure favoured by central banks and economists because it strips out volatile food and energy prices – increased less than expected. Core CPI rose 0.3 per cent, below the 0.4 per cent expected.  

“It’s encouraging to see the pace moderating a bit month over month supporting the notion that recent price increases are transitory and reopening related,” Mike Loewengart, managing director of investment strategy at E*TRADE Financial, told CNBC. “So while inflation continues to run hot, it’s likely that investors are already pricing it in.”

The data appeared to support the Fed’s conviction this year’s spike in inflation will prove transitory. Used car prices, which jumped 10 per cent in June, increased by a tepid 0.2 per cent last month.

Infrastructure stocks continued to rise following the passage of a US$1 trillion infrastructure package through the Senate. Caterpillar gained 3.55 per cent, Deere 2.51 per cent, Nucor 3.91 per cent and Vulcan Materials 3.24 per cent.  

Australian outlook

A subdued but positive start coming up for the local market following a night of broadly supportive price movements. The S&P/ASX 200 is in one of those rare but lucrative periods when it grinds higher each session. The index has broken fresh ground every day for the last six sessions, rising 22 points or 0.29 per cent yesterday to a new closing high.

Wall Street was strong where it matters for the ASX: materials +1.42 per cent, financials +1.17 per cent. Industrials gained 1.3 per cent, utilities 0.92 per cent and energy 0.75 per cent. Tech was flat. Health fell 0.97 per cent.

A retreat in the US dollar helped commodity prices, but provides a broader market headwind by lifting the local dollar, making Australian equities more expensive for holders of other currencies and exports less competitive. The dollar rallied 0.43 per cent to 73.75 US cents.

Earnings season is in full swing now and will provide much of the direction this session. The heaviest day of the season so far brings reports from Telstra, AMP, Goodman Group, QBE, AGL, Mirvac and Downer EDI. NAB and ANZ provide third-quarter trading updates. Xero holds its AGM.

IPOs: Cannon Resources lists today at 12 pm AEST. Cannon has been spun out of Rox Resources to maximise the value of two nickel projects.

Commodities

Oil shrugged off news the White House was pressuring the OPEC+ oil cartel to increase output to help prices. Brent crude settled 81 US cents or 1.2 per cent ahead at US$71.44 a barrel after briefly falling more than 1 per cent.

Iron ore recouped a portion of Tuesday’s 5.3 per cent drop. The spot price for ore landed in China bounced US$4 or 2.5 per cent to US$166.20 a tonne.

BHP‘s US-listed stock lifted 0.44 per cent and its UK-listed stock gained 0.45 per cent. Rio Tinto faded 0.97 per cent in the US and 1.02 per cent in the UK.

Gold scored back-to-back gains for the first time in roughly a month as the US dollar and treasury yields declined. Metal for December delivery settled US$21.60 or 1.2 per cent higher at US$1,753.30 an ounce. The NYSE Arca Gold Bugs Index rose 2.12 per cent.

Copper eased after BHP announced a tentative deal with mining unions to avoid a strike at its Escondida mine in Chile. Benchmark copper on the London Metal Exchange dipped 0.1 per cent to US$9,482.50 a tonne. Aluminium gained 0.5 per cent, nickel 2.2 per cent, lead 2.4 per cent, zinc 1.5 per cent and tin 0.9 per cent.

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