Australian shares are set to rise for a third consecutive session on Wednesday on the back of another stronger performance on Wall Street and ahead of the release of October inflation data.
The S&P/ASX 200 should increase by 1.1% at 10 am AEDT (11 pm GMT Tuesday), according to Australian Securities Exchange (ASX) futures trading, which quoted the December share price index contract 97 points over the previous settlement at 8,646 points.
The major economic news today is the release of October inflation data, with Commonwealth Bank of Australia economists expecting a 0.2% fall due to lower electricity prices, which would bring the year-on-year rise to 3.6%.
Chief CommSec Economist Ryan Felsman said recent economic data had pushed expectations of the next interest rate cut to May 2026, with the chances of an easing in monetary policy at that time rated at just 40%.
“There’s potential that we could see the narrative change to more of a focus on rate hikes next year if the economy continues to push up against those capacity constraints and speed limits,” he said.
Shares on Wall Street extended their rally on Tuesday as economic releases increased the chances the U.S. Federal Reserve would lower interest rates in December.
Data, including retail sales and producer prices, showed spending and inflation falling, while some Fed governors have called for a rate cut in December.
Murphy & Sylvest Market Strategist Paul Nolte said the Fed’s position had changed since Chair Jerome Powell told the market last month that rates would be on hold in December.
"Then we had Fed governors speaking and we've gone from 'we're not going to do anything in December' to 'we need to cut in December because we're seeing some serious weakening in the job market,” he was quoted as saying in a Reuters article.
The Dow Jones Industrial Average jumped 1.4%, the S&P 500 climbed 0.9% to 6,765.9, and the Nasdaq Composite put on 0.7% on Tuesday (Wednesday AEDT).
The Australian market had closed a little stronger on Tuesday with the S&P/ASX 200 gaining 0.14% to 8,537.00 points.
In the bond markets, Australian Government bond yields rose across the curve with two-year rates up by 0.11% to 3.688% and 10-year rates 0.16% higher at 4.295%.
