ASX to rise, Wall Street ends lower, ahead of economic data, earnings

Australian shares are expected to start the day slightly higher, despite Wall Street losing ground overnight.

ASX futures were up 22 points, or 0.3 per cent, to 6,525 at 6:52am AEST.

At the same time, the Australian dollar was down, at 67.36 US cents.

World equities and US bond yields fell on Monday as investors prepared for fresh inflation data and corporate earnings that may be seen as potentially influencing the Federal Reserve’s path ahead for interest-rate increases.

The pan-European STOXX 600 index lost 0.5 percent and MSCI’s gauge of stocks across the globe shed 1.2 percent.

Underlining the global nature of the inflation challenge, central banks in Canada and New Zealand are expected to tighten policy further this week.

Wall Street — which was off to a strong start in July after a brutal first half of the year — further declined as traders fear another round of heavy sell-off if company results fail to meet expectations this month.

The market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.

“Not only are people worried that earnings are going to come in weak because of an economic slowdown, but also because of the rise of the US dollar, which creates a headwind for earnings for multinationals,” Dakota Wealth Management’s senior portfolio manager, Robert Pavlik , said.

The Dow Jones Industrial Average fell 164 points, or 0.5 percent, to 31,174, the S&P 500 lost 45 points, or 1.2 percent, to 3,854 and the Nasdaq Composite dropped 263 points, or 2.3 percent, to 11,373.

Later in the week, a raft of US economic data — including consumer prices, retail sales and factory output — should provide a glimpse of the extent to which inflation has peaked and the economy has cooled down as the Federal Reserve moves closer to next week’s policy meeting, which is expected to culminate in the second straight 75-basis-points interest rate hike.

Chris Zaccarelli — chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina — said his position remains “cautiously optimistic”, but investors’ worry about a recession should not be ignored.

“We believe the headwinds to the economy and the market are substantial as inflation remains too high … However, we acknowledge that a lot of bad news has already been priced in, with the Nasdaq down and the S&P 500 continuing to decline from all-time highs,” Mr. Zaccarelli said.

On oil markets, Brent crude was down, trading at $US106.41 a barrel, by 07:08am AEST.



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