A new high by the S&P 500 index has set the Australian sharemarket up for a strong opening on Wednesday ahead of key inflation data.
The ASX 200 index should begin about 0.4% above the previous close, based on Australian Securities Exchange (ASX) trading, with the March share price futures contract quoted 38 points over the prior settlement at 8,937 points at the time of writing.
United States stocks had closed mixed overnight, with the S&P 500 reaching a new peak near the 7,000 point level, but the key driver today will be the consumer price index numbers to be published by the Australian Bureau of Statistics at 11:30 am AEDT (1:30 am GMT).
Chief CommSec Economist Ryan Felsman said Commonwealth Bank economists expected an 0.9% quarterly increase in the trimmed mean or underlying inflation measure, making a 3.3% annual rate versus 3.0% a quarter earlier.
But if the quarterly outcome was 1.0% or higher, that would lift the chances of the Reserve Bank of Australia raising official interest rates at its meeting next month.
“The sharemarket could be under pressure if the market prices in a rate hike,” Felsman told Azzet.
Supporting the local market were higher gold and energy prices overnight.
Major U.S. indexes ended mixed on Tuesday (Wednesday AEDT) as the S&P 500 briefly reached a new peak due to rises in large technology shares ahead of earnings updates and a U.S. interest rate decision this week, and despite healthcare sector weakness.
The S&P index rose 0.4% to 6,978.6 points, and the Nasdaq Composite added 0.9%, but the Dow Jones Industrial Average fell 0.8% as UnitedHealth slid.
Osaic Wealth Chief Market Strategist Phil Blancato said the U.S. market was split, with the Dow lower due to an announcement about large increases in Medicare premiums.
"When you look at everything else, the market seems to be hanging in there waiting for a big week of earnings," he was quoted in a Reuters story as saying.
The Australian market had closed at a 50-day high on Tuesday due to support for mining stocks as precious metal prices hit new highs, with the ASX 200 Index ending 0.9% higher at 8,941.6 points.
In fixed interest markets, Australian Government bond yields were unchanged, with two-year rates sitting at 4.229% and 10-year rates at 4.866%.
