US sharemarkets finished higher overnight after weaker-than-expected inflation data eased concerns about further interest rate increases, while strong earnings from major banks lifted investor sentiment.
The S&P 500 rose 0.38% to 7,543.59, while the Nasdaq Composite gained 0.9% to 26,107.01. The Dow Jones Industrial Average edged up 9.63 points to 52,508.27, with gains limited by a sharp fall in IBM after the company warned softer software and infrastructure demand would weigh on second-quarter profits.
Technology stocks rebounded following Monday’s sell-off. The semiconductor sector recovered strongly, with the VanEck Semiconductor ETF rising 2.5%. Micron Technology climbed around 5%, while Lam Research, Applied Materials and Teradyne also posted solid gains.
Investor sentiment was boosted after US consumer prices fell 0.4% in June, bringing annual inflation down to 3.5%, below expectations of 3.8%. The softer reading reduced expectations of a near-term Federal Reserve rate increase, although markets continue to price in a reasonable chance of a hike later this year.
Financial stocks also supported the market after major banks reported strong quarterly earnings. Goldman Sachs surged 9% following an earnings beat, while JPMorgan Chase and Bank of America both gained about 2%. JPMorgan chief executive Jamie Dimon said market conditions were “as close to as good as it gets”, although he cautioned the strength may not last.
Oil prices remained elevated after the US launched fresh strikes on Iran, although crude retreated from session highs after President Donald Trump abandoned plans to impose a 20% fee on ships transiting the Strait of Hormuz.
Australian Market Outlook
Australian shares are expected to open higher, supported by gains on Wall Street after softer US inflation and strong bank earnings improved global market sentiment.
S&P/ASX 200 futures are up 49 points, or 0.6%, to 8,817.
Investors will be watching earnings from Morgan Stanley and BlackRock later tonight, while China’s second-quarter GDP figures are also due. These releases are expected to provide fresh insight into the outlook for global growth and financial markets.
