Australian shares are poised to drop at the open. US stocks were modestly higher, as investors interpreted US Federal Reserve chairman Jerome Powell’s testimony to Congress as a signal that the probability of a rate pivot in September is rising.
ASX futures were down 41 points, or 0.5 per cent, near 7am AEST.
The S&P 500 was 4.1 points or 0.07 per cent higher to 5576.98, which marks its 36th record closing higher this year and the sixth consecutive day of gains – its longest winning streak since January. The Nasdaq Composite also closed at another record high.
Tesla rallied 3.7 per cent, Nvidia added 2.5 per cent and Apple advanced 0.4 per cent, lifting its market cap to $US3.51 trillion.
The most cited part of Powell’s prepared remarks were: “Elevated inflation is not the only risk we face. Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
Oxford Economics’ Ryan Sweet said: “We’re increasingly confident in our forecast that the Fed will cut rates in September.”
Meanwhile, local investors will turn their attention to the Reserve Bank of New Zealand’s policy decision at noon.
“The RBNZ remains focussed on inflation despite softness in the economy and will likely stick to its knitting in July, acknowledging economic activity is faltering but continuing to warn that it is in no rush to respond,” National Australia Bank economists wrote.
“There is no forecast update or new interest rate track at this meeting. A focus in the MPR will be any repeated comment that the committee pondered raising interest rates at this meeting, as it did in May.”
Stocks in focus
Incitec Pivot says it has ceased negotiations with Indonesia’s PT Pupuk Kalimantan Timur for the sale of its fertilisers business. The company said it an announcement that it would continue to manage its explosives business Dyno Nobel and fertilisers businesses separately. In the near-term, the company said it would prioritise a $900 million buyback.