Stocks rose Monday as traders looked ahead to Tuesday’s key inflation report, regaining their footing after the S&P 500 and Nasdaq Composite suffered their worst weekly declines in nearly two months.
Investors will get more inflation data tomorrow when January’s consumer price index report will be released, showing if price increases have continued to slow amid the central bank’s rate hikes.
So far, investors seem to be betting on a solid CPI print on Tuesday that shows inflation is cooling and that a pause or pivot in Fed rate hikes may be near.
The Dow Jones Industrial Average closed 1.11 per cent higher, its best daily performance in February. The S&P 500 climbed 1.14 per cent, and the Nasdaq Composite advanced 1.48 per cent.
Microsoft led the Dow’s gains, rising 3 per cent. Nike, Salesforce and Intel also boosted the index, up 2.5 per cent, 2.3 per cent and 2.61 per cent, respectively.
This boost could dissipate by the US summer, however, especially as the lagging impact of central bank rate increases tightens global financial conditions.
On the flip side, a miss on the Tuesday report would likely signal that the Fed will hike interest rates even more, putting downward pressure on equities.
The final leg of earnings season also continues this week, with Coca-Cola, Marriott, Cisco, Marathon and Paramount. So far, companies have reported worse-than expected results, making this year the worst earnings season in more than two decades, excluding recessions, according to Credit Suisse.
In company news, Ford announced on Monday that will work with a Chinese company CATL on a $3.5 billion battery plant in Michigan, despite political pushback against Ford’s relationship with the firm.
And yesterday's super bowl highlighted the changing dynamics of markets – the telecast was chock-full of commercials targeting Americans’ most cherished pastimes: “booze, betting and bingeing’ advertises noted. One thing missing from this year’s game: crypto ads. Last year was the so-called “Crypto Bowl.” This year: a crypto shutout. While one of Tesla’s biggest critics sponsored a Super Bowl ad assailing the safety of the carmaker’s self-driving vehicles. Looking ahead…the NFL will solidify its embrace of gambling at next year’s Super Bowl, which is being played in Las Vegas for the first time.
Overnight, all S&P 500 sectors finished higher except Energy. Technology was the best performer, closing 1.78 per cent higher.
In commodity news, a basket of industrial metals that trades in London just notched its best January in more than a decade. U.S. copper futures posted their best first month of the year since 2003. Aluminium prices in London have climbed 10 per cent so far this year. Zinc has added 2.4 per cent and tin has gained 11 per cent.
Futures
The SPI futures are pointing to a 0.7 per cent gain.
Currency
One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 69.67 US cents (Mon: 69.17 US cents).
Commodities
Iron ore futures are pointing to a 1.1 per cent fall. Iron ore is 3.4 per cent lower at US$121.85 tonne.
Gold lost 0.5 per cent. Silver fell 0.4 per cent. Copper gained 1.1 per cent and oil lost 0.5 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE added 0.8 per cent, Frankfurt gained 0.6 per cent while Paris closed 1.1 per cent higher.
In Asian markets, Tokyo’s Nikkei fell 0.9 per cent, Hong Kong’s Hang Seng lost 0.1 per cent while China’s Shanghai Composite closed 0.7 per cent higher.
Yesterday, the Australian sharemarket closed 0.2 per cent lower at 7,418.
Ex-dividends
QV Equities (ASX:QVE) is paying 1.3 cents fully franked
Suncorp Group (ASX:SUN) is paying 33 cents fully franked
Dividends payable
Charter Hall Long WALE REIT (ASX:CLW)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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