Inflation watch & ASX to edge higher | Jessica Amir on Ausbiz
This week's market sentiment is notably bullish. Moomoo Market Strategist Amir Jessica discussed the rationale behind this in a recent Ausbiz interview. She highlighted key focal points for the week, including inflation easing, the price changes of oil and metals in Australia, and the significance of China's announcement of establishing the largest-ever semiconductor investment fund.
Market sentiment is notably bullish this week, despite both the US and UK markets closed overnight for public holidays. Additionally, the "risk-on" tone, supported by expectations of US PCE and local CPI data, will ease. The VIX fear gauge is currently at its lowest level since February, reflecting a growing sense of confidence among investors.
The Fed's preferred inflation measure, due Friday, is expected to show the smallest gain in a year. Despite expectations of a Fed rate cut in 2024, or even if there are no cuts, the earnings of strong US companies continue to support the equity market. Additionally, attention is on US weekly jobless claims data and second-quarter GDP data ahead of the PCE release.
Locally in Australia, the same narrative of easing inflation is expected to play out. The CPI is expected to decrease in April, which will bode well for Australian equities. Despite this, the Reserve Bank of Australia is not expected to adjust rates this year.
What to watch today:
Oil prices are currently at three-month lows, but this trend may not persist due to the Northern Hemisphere summer and ongoing OPEC production cuts.
Additionally, cargo rates in Asia are increasing, indicating tight capacity. Last week, the cost for a 40-foot container to the US West Coast from Asia surged over 13% to $4,915, as reported by Freightos data.
Copper, gold, nickel, and silver prices have also risen by 1% and are expected to continue increasing this week, supported by easing inflation and China's economic revival.
Finally, Jessica touches on China's establishment of a $47.5 billion semiconductor fund. This will not only accelerate the development of the local chip industry but also indicate a growing demand for rare metals and minerals - which is expected to benefit Australian miners.
Click the image to watch the full interview：
