Wall Street rallies on inflation report, ASX set for flat start

Industrials (down 0.4 per cent) were also weaker, with Qantas sliding 2.5 per cent and Auckland International Airport losing 1.2 per cent.

The lowdown

Capital.com senior financial market analyst Kyle Rodda said the Australian sharemarket was supported by retailers and real estate investment trusts, paring back losses from the mining sector.

“The miners have been a weight on the local index, with iron ore prices extending their post-NPC plunge,” he said. “Gold miners have also pulled back after a drop in the underlying gold price following last night’s upside US consumer price index surprise.”

The US inflation report, which provides a clue on how soon the Federal Reserve might begin cutting rates, was hotter than expected, suggesting inflation was sticking around and keeping the door closed on hopes the Feds could deliver long-sought cuts to interest rates at its meeting next week.

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But the inflation figures were still relatively close to expectations, and traders held on to hopes that the longer-term trend downward means the Fed will begin the hoped-for cuts in June.

That helped Wall Street reverse its losses as the day progressed. The S&P 500 finished 1.1 per cent higher to top its all-time record set last week. The Dow Jones climbed 235 points, or 0.6 per cent, and the Nasdaq composite jumped 1.5 per cent.

The immediate reaction across financial markets to the inflation data was halting and uncertain.

In the bond market, Treasury yields initially dropped and then swung higher. The yield on the 10-year Treasury eventually rose to 4.15 per cent from 4.10 per cent late Monday.

On the US sharemarket, big technology stocks did much of the heavy lifting. Oracle jumped 11.7 per cent after reporting stronger profit for the latest quarter than analysts expected.

In stock markets abroad, Japan’s Nikkei 225 slipped 0.1 per cent to retreat further from its recent records. Expectations are building that its central bank will raise interest rates, which are below zero.

Indexes jumped 3.1 per cent in Hong Kong, 1.2 per cent in Frankfurt and 1 per cent in London but moved more modestly elsewhere across Asia and Europe.

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“After exceptionally high rental growth of 25 to 50 per cent over the past two years, the market has entered a stabilisation phase for rents,” said Knight Frank research and consulting partner Jennelle Wilson as the volume of industrial property deals fell by more than a quarter over the past year.

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With AP