Aussie shares were poised to open little changed near all-time highs after Wall Street brushed off the hottest US inflation report since 2008.
The S&P 500 hit a record as bond yields declined. Iron ore rose for a third session. Gold and oil inched higher.
ASX futures finished the night session broadly flat, one point or 0.01 per cent higher at 7307.
Equity and bond markets took in their stride news consumer prices rose last month at their fastest pace since the run-up to the Great Financial Crisis. Bond yields jumped briefly, then swooned to their lowest since early March, providing a tailwind for companies whose valuations are tied to the cost of borrowing.
The S&P 500 climbed 20 points or 0.47 per cent to its first new high of the month. The Nasdaq Composite rallied 109 points or 0.78 per cent. The Dow Jones Industrial Average gained 19 points or 0.06 per cent.
Headline consumer prices increased 5 per cent from last May. Economists polled by Dow Jones had expected a rise of 4.7 per cent. Core inflation, which strips out food and energy prices, increased 3.8 per cent, the strongest result in almost three decades.
"The numbers were slightly more than expected, but not way outside of the range," Mark Grant, chief global strategist at B. Riley Financial, told Reuters. "I don't think this going to change the Fed's view of keeping rates very low," he added.
“I think there were a lot of people who held back, who wanted to see the hotter inflation number,” CNBC’s Jim Cramer said. “Now they’ve said, ‘OK, now that’s over with. Let’s do some buying.’ Because they’ve been on the sideline and they want to get in.”
Economists pointed to outliers skewing the result. A 7 per cent jump in used car costs reportedly accounted for around a third of the increase. Some economists said the jump was exaggerated by the impact of Covid disruptions on the base month last year. The yield on ten-year US treasuries fell more than four basis points to 1.445 per cent, a sign bond traders expect inflationary pressures to ease.
“The details of today’s print continue to support the idea that the spike in inflation is transitory, even if it is more intense than most forecasters (myself included) would originally have anticipated,” Eric Wingorad, senior economist at Alliance Bernstein, wrote.
The market looks set to enter the Queen's Birthday long weekend close to a record. (The ASX is closed on Monday.) Futures action suggests limited enthusiasm for higher levels, but the market has defied soft leads all week, even if it struggled to retain its gains.
The S&P/ASX 200 rallied 32 points or 0.44 per cent yesterday, finishing above 7300 at the fifth attempt. Falling bond yields supported property stocks, tech and healthcare.
US action points to the same dynamic today. The US health sector gained 1.69 per cent, real estate 0.95 per cent and technology 0.75 per cent.
Part of the explanation for this morning's soft ASX futures figure is pressure on the twin pillars of the Australian market. The financial sector dropped 1.12 per cent as declining borrowing costs dulled lenders' ability to increase margins. The materials sector fell 0.56 per cent.
Coles holds an investor day today. Marley Spoon holds its AGM.
The dollar improved 0.29 per cent overnight to 77.51 US cents.
Iron ore firmed for a third session, boosted by reports of falling inventory at Chinese ports amid slowing imports. The spot price for ore landed in China advanced $3.50 or 1.6 per cent to US$217 a tonne.
BHP's US-listed stock bounced 1.12 per cent and its UK-listed stock gained 0.14 per cent. Rio Tinto inched up 0.03 per cent in the US and eased 0.58 per cent in the UK.
Oil edged higher despite news the US had lifted sanctions on some Iranian officials, a potential indication the White House was nearing a deal on Iran's nuclear program that could bring Iranian crude back onto the marketplace. Brent crude settled 30 cents or 0.4 per cent ahead at US$72.52 a barrel.
Gold settled little changed in the wake of the US inflation report, but has since climbed back above US$1,900 an ounce. Metal for August delivery settled 90 cents or 0.1 per cent ahead at US$1,896.40. The contract has since risen $5.90 or 0.31 per cent to US$1,901.40. The NYSE Arca Gold Bugs Index firmed 2.72 per cent.
Copper declined after a surge in Chinese producer prices prompted its state planner to warn it is monitoring price movements for manipulation and hoarding. Benchmark copper on the London Metal Exchange dropped 0.9 per cent to US$9,863 a tonne. Lead declined 1 per cent, zinc 0.8 per cent and tin 0.4 per cent. Aluminium rose 0.6 per cent. Nickel gained 0.8 per cent.