The share market was poised start the last session of a strong month near record levels after US stocks rallied into a long weekend.
ASX futures edged up six points or 0.08 per cent.
The S&P/ASX 200 put on 1.2 per cent on Friday to extend its tally for the month to around 2.2 per cent. The index finished the session within 18 points of last February's all-time intraday high.
US stocks inched higher into the Memorial Day long weekend as investors digested a spike in inflation that surpassed the market consensus but fell short of economists' worst fears.
The S&P 500 finished three points or 0.08 per cent ahead, but well off its highs as traders trimmed positions ahead of tonight's holiday. The Dow Jones Industrial Average gained 65 points or 0.19 per cent. The Nasdaq Composite added 12 points or 0.09 per cent.
Consumer prices increased by 0.7 per cent last month, according to the Federal Reserve's favoured measure for gauging inflationary pressures. Economists expected a reading around 0.6 per cent. Core prices rose 3.1 per cent for the 12 months since April last year, beating the 2.9 per cent consensus and soaring well beyond the Fed's 2 per cent target.
"The inflation data... was a high print, but really not that far ahead of consensus,” Keith Buchanan, senior portfolio manager at Globalt, told Reuters. “Base effects definitely play a role, distorting the takeaways from some very large year-over-year type of numbers,” he added.
The Federal Reserve previously said it anticipated a short-term jump in inflation as pent-up demand fuelled a sharp increase in prices. The central bank expected the surge to be temporary, with price pressure to ease later this year as the economy returned to more normal growth patterns. The yield on ten-year US treasuries declined back below 1.6 per cent in the wake of Friday's report.
The Dow and S&P 500 ended two-week losing streaks with gains of 0.9 and 1.2 per cent, respectively. The Nasdaq rose 2.1 per cent, its best weekly return since early April. For the month, the Dow and S&P 500 gained 1.9 and 0.6 per cent. The Nasdaq Composite shed 1.5 per cent as inflationary fears depressed interest in growth stocks.
The local market climbed the wall of worry last week to within a few points of last year's pre-pandemic peak. The index may see blue skies by this afternoon's close if end-of-month buying continues. The ASX 200 jumped 85 points on Friday as fund managers put the icing on an eighth straight winning month.
Victoria's Covid-19 cluster is the most obvious market headwind, even if investors appeared to take the latest lockdown in their stride. The state recorded five new local cases on Saturday and the same again yesterday, increasing the cluster to more than 40. A seven-day lockdown is due to end at midnight on Thursday if officials feel enough progress has been made to contain the breakout.
A US holiday tonight would normally depress trading volumes here today, but the end of the month generally brings elevated volumes as institutional investors shuffle portfolios.
The old month winds up with private-sector credit figures today, plus Chinese manufacturing and services PMIs. June brings a blizzard of economic data, as well as a Reserve Bank policy meeting and statement.
The RBA meets tomorrow, a day that also includes reports on manufacturing, building approvals and corporate profits. Wednesday brings quarterly GDP figures, which are expected to confirm a slowdown from last year's post-lockdown rebound. Thursday offers retail sales, construction and trade data.
This week's IPO list currently includes nickel miner Lunnon Metals (Tuesday), education technology firm Keypath Education International (Wednesday), gold miner Torque Metals (Thursday) and African explorer Arcadia Minerals (Friday).
Worley holds an investor day on Wednesday. Wesfarmers holds a strategy briefing day on Thursday.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) holds its monthly meeting via videoconference tomorrow. The key issue so far as equity markets are concerned is whether the cartel decides to increase output. More supply = pressure on crude prices.
The dollar bounced 0.52 per cent this morning to 77.12 US cents.
Gold closed above US$1,900 an ounce for the first time since January as strong US inflation data encouraged hedging. Metal for August delivery settled $6.80 or 0.4 per cent higher at US$1,905.30 an ounce. The NYSE Arca Gold Bugs Index gained 0.5 per cent.
“Gold has enjoyed the return of inflation in the economic data of May and capital flows have returned to drive higher as [bitcoin] has experienced up and down volatility,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.
BHP and Rio Tinto declined in overseas trade despite improvements in iron ore and industrial metals. BHP's US-listed stock eased 0.18 per cent and its UK-listed stock shed 0.56 per cent. Rio Tinto eased 0.35 per cent in the US and 0.16 per cent in the UK. The spot price for ore landed in China rose $1.90 or 1 per cent to US$189.55 a tonne.
Benchmark copper on the London Metal Exchange advanced 0.4 per cent to US$10,248.25 a tonne. Aluminium added 0.3 per cent, nickel 1.2 per cent and tin 4 per cent. Zinc closed unchanged. Lead dipped 0.6 per cent.
US-traded copper climbed 0.3 per cent to US$4.68 a pound. Expectations for a big-spending infrastructure program helped lift the metal 4.4 per cent for the week and 4.7 per cent for the month.
Oil declined ahead of tomorrow night's OPEC+ meeting. August Brent crude settled 48 cents or 0.7 per cent weaker at US$68.72 a barrel.