Weak underlying US inflation for September has again raised questions abut the path of US interest rates, and it seems Wall Street is picking up positives from that scepticism.
US consumer price inflation rose 0.8% last month from August because of the sharp rise in petrol and energy prices. The core inflation reading was an increase of just 0.1%, lower than forecast and another sign that like in so many other economies, inflation is not reviving like central bankers think it is or should be.
So partly reflecting this weak US inflation reading, bond yields fell in the US, Europe and Australia. The $A rose to around 78.80 US cents as commodity prices rose (including iron ore) and the US dollar eased after several weeks of gains.
The inflation reading payed into signs of continuing confusion about inflation and wage rises in the US Fed with the minutes of the last meeting of its important Open Market Committee showing a split in thinking on the future path of cost pressures in the US economy.
While economists think the chances of a rate rise are still positive for the December meeting of the Fed, the chance of another three rate rises in 2018 is starting to look remote, especially if inflation does not rise and wage rises continue to rise at their sub-3% rate.
Eurozone shares were flat on Friday and the US S&P 500 gained 0.1% on the back of strong retail sales data but continued soft underlying inflation.
The positive global lead along with further gains in commodity prices saw ASX 200 futures gain 12 points or 0.2% pointing to a positive start to trade for the Australian share market later today.
That was after the ASX had its best week last week since March, with a broad-based advance led by consumer discretionary and utility companies.
The benchmark ASX 200 index climbed 19 points, or 0.3%, to end Friday at 5814. The All Ordinaries was 0.4% higher at 5884. For the week, the ASX 200 rose 1.8%, its best week in percentage terms since the last week of March.
For the week, Eurozone shares were flat and US shares only rose 0.2% (with good data but uncertainty about tax reform and President Trump’s end to Obamacare related health insurance subsidies acting as constraints), Japanese shares rose 2.6% and Chinese shares rose 2.2%.
On Wall Street, US benchmarks finished the week on a high note on Friday, with that weaker that forecast but a strong 1.6% surge in retail sales last month.
The Dow rose 0.1% to 22,872.89, and 0.4% for the week, making it the fifth rise in a row.
The S&P 500 closed 0.1% higher at 2,555.24, and 0.2% over the week—also its fifth a row.
And the Nasdaq rose 0.2% to 6,605.80, and 0.2% on the week for a third weekly gain in a row.
