Local Market Eyes Inflation Data

11.15 am Wednesday 24 April 2013

Local Market Eyes Inflation Data

By William Leys Sales Trader, CMC Markets Sydney

Following a series of eventful sessions offshore. the Australian equity market has posted solid gains in morning trade.

In the US, markets were briefly spooked when the Associated Press was hacked and a bogus tweet about an attack on the White House was sent. However, it didn't take long for the hoax to be revealed, and investors quickly shifted their focus to the release of various positive corporate earnings results, pushing markets to a strong close.

In Europe, markets were up for a very different reason. The release of uninspiring German flash manufacturing data has traders anticipating a rate cut in the Euro zone, and chatter about a possible strategic shift from austerity to stimulus measures is increasing.

Locally, attention will be centred on the release of the consumer price index data due at 11:30am AEST. The expectation is for an increase of 0.7% from the last quarter, which would be interpreted as remaining 'in check'. If the data comes in considerably lower than this, it is likely the RBAs easing bias will intensify given the recent spate of soft economic data. In turn, this may provide another shot in the arm for the market, particularly higher yielding equities like the banks and consumer staples. On the flip side, if the CPI data comes in higher than expected, a rate cut would appear less likely in the near term, and we may see some of the early gains erased as a result.

ENDS

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