IG | Aug 20, 2015 02:32AM ET
Inflation deflates ‘lift-off’ expectations
Fed watchers had a night to remember, with the Fed minutes being backed almost immediately with the release of the US CPI data.
The dovish statement and the soft inflation read may see Fed hawks having to wait for a few more meetings.
Main Points from the minutes
Where did the inflation go?
The market dilemma
Intraday trade on the back of the US data saw a slight relief rally post ‘full’ release of the minutes – the USD loss ground against a basket of currencies, and the S&P recovered some of the ground lost in the morning session.
However, there will come a point where ‘holding the line’ will be seen as a negative. Questions about long-term sustainability in the economy will rise, and questions about long term policy positions and if it has or will work(ed) should be expected. That will mean that although inflation is likely to see a ‘hold’ in September, a rate hike is still very much expected in 2015.
Ahead of the Australian open
Massive day on the earnings front, with over 25 companies reporting today. The main corporates to watch are Wesfarmers (ASX:WES), Qantas (ASX:QAN) and Fortescue (ASX:FMG).
Earnings season remains above average, with corporates beating estimates 50% of the time on the revenue line and 56% on the EPS line. What is also mildly pleasing is that earnings growth is currently sitting at 3% compared to the estimates heading into reporting season of 1%.
There is now a ‘cheapness’ in the market due to the macro-storms that are affecting global markets. When that settles down, longer-term investors are likely to bid up the market.
However, after yesterday’s positive bounce-back, today is likely to see a downside after the leads from the Street. We are calling the ASX down 0.6% to 5347; however, the comfort here might be the fact that the ASX is ahead of the global market. Having underperformed for the past week, it might moderate a heavier loss.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.