Originally published by Rivkin Securities
At 11:30am AEST, Australian CPI figures will tell us whether inflation is going to show signs of developing an uptrend, or whether choppy figures will indicate that we’re not yet ready to bounce out of the 1%-2% range, where core inflation has spent the last five quarters. The forecast for the RBA Trimmed Mean (which is what we’ll watch for) is a decline to 1.8%, while headline inflation is forecast to rise from 2.1% to 2.2%. And surprises that are higher than these forecasts might spook the market a little, and give the Australian dollar another push higher. The opposite is also true, and I believe the market will celebrate softer inflation – we’ve only moved on two quarters from what was a 34 year low in core CPI, so I’m probably less inclined than most to think that a rate hike is a 2017 certainty.
It was a positive day for ASX equities yesterday – small rises from the big banks and decent jumps in Newcrest Mining Ltd (AX:NCM) and CSL Ltd (AX:CSL) (up 2.02%) punctuated the positives among the big listings, while broad gains were made across much of the S&P/ASX 200, which finished 38.5 points higher. It’s quite a light time for trading on the ASX so don’t be too rattled if today’s CPI announcement pushes the market around disproportionately. Low levels of liquidity are making it easier to move stocks.
Quite a busy day for big data releases today, all AEST:
- Wednesday 00:00 US Consumer Confidence (came in at XXX.X versus 116.5 forecast)
- Wednesday 11:30 Australian Consumer Price Index data
- Wednesday 13:05 RBA Speech
- Wednesday 18:30 UK GDP