Morning Bell 13 August

In the U.S. overnight the S&P and Nasdaq reset their respective record highs while the Dow Jones also closed higher as investors welcomed the latest CPI reading which came in tamer than expected. The S&P 500 rose 1.13%, the Nasdaq added 1.4% and the Dow Jones ended the day up 1.1%. The US CPI reading rose 2.7% on an annualised basis in July which fell short of economists’ estimates of a 2.8% rise, while core CPI rose 3.1% which slightly beat expectations. The data indicates Trump’s tariffs are having a lower impact than expected on inflation and supports the case for the Fed to consider a rate cut in the near future.

In Europe overnight, markets closed mostly higher in the region after US inflation accelerated less than expected. The STOXX 600 rose 0.24% on Tuesday while the French CAC added 0.8% and the UK’s FTSE100 climbed 0.22%, but Germany’s DAX fell 0.13%.
Across the Asia region on Tuesday, markets in the region closed mostly higher after a tariff truce was called between the US and China. Japan’s Nikkei hit a record high, ending the day up 2.15%, while Hong Kong’s Hang Seng added 0.25% and China’s CSI index ended the day up 0.52%.

The local market started the new trading week higher with a 0.41% rise on Tuesday, following the RBA’s 0.25% or 25-bps rate cut yesterday and on the back of key catalysts in the earnings and materials spaces over the last few sessions.

The RBA’s rate cut was expected and the board said ‘with underlying inflation continuing to decline back towards the midpoint of the 2–3 per cent range and labour market conditions easing slightly, as expected, the Board judged that a further easing of monetary policy was appropriate’ but there was no discussion of a larger rate cut as Australia’s central bank takes a more conservative approach to the rate journey amid extensive macro factors influencing our inflation journey.

On the reporting season calendar yesterday we saw shares in geolocation tracking services and hardware company Life360 (ASX:360) soar 9% after the company released Q2 and H1 results that topped expectations including a 36% jump in both revenue and annualised monthly revenue.

While at the other end of the market Seven Group (ASX:SGH) tumbled 9% following the release of FY25 results including revenue up just 1% while low to mid-single-digit EBIT growth is expected as guided to by management which will fall below that of the 8% delivered in FY25.

What to watch today:

• On the commodities front this morning oil is trading 1.19% lower at US$63.20/barrel, gold is up 0.2% at US$3348/ounce and iron ore is up 0.73% at US$101.96/tonne.
• The Aussie dollar has strengthened against the greenback to buy 65.31 US cents, 96.47 Japanese Yen, 48.20 British Pence and 1 New Zealand dollar and 10 cents.
• Ahead of the midweek trading session the SPI futures are anticipating the ASX will open the day up 0.16%.

Trading Ideas:

• Bell Potter has decreased the 12-month price target on SGH (ASX:SGH) from $54 to $51 and maintain a hold rating on the diversified company following the release of the company’s results as the analyst sees the company is facing short-term cyclical headwinds in construction markets, offsetting healthy operating conditions in mining markets.
• And Trading Central has identified a bearish signal on Auckland International Airport (ASX:AIA) following the formation of a pattern over a period of 7-days which is roughly the same amount of time the share price may fall from the close of $6.94 to the range of $6.59-$6.65 according to standard principles of technical analysis.