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The major indexes recorded strong gains as investors celebrated reassuring inflation data and bond yields fell. The S&P 500 Index recorded its best week since June and hit its best intraday level in two months. After the release of consumer inflation data on Thursday, the index recorded its largest daily gain since April 2020.
Most of the rest of the week’s economic data were largely in line with consensus expectations. The notable exception was the Friday morning release of the University of Michigan’s preliminary gauge of November consumer sentiment, which fell unexpectedly to its lowest level since July. The survey’s lead researcher attributed the drop in part to poor buying conditions for durables given high prices and interest rates.
Fed governor Chris Waller was asked whether there were conflicting signals at the last Fed meeting in which the Fed signalled it would slow the pace of rate rises after a 75-basis point increase, a move welcomed by markets, while chairman Jerome Powell made hawkish comments at the press conference.
“The minute we said, ‘oh, we’re leaning towards maybe slowing down from 75 to 50’, we knew the market was going to jump for joy.”
The trick, he said, was to not allow a slowing pace to be confused for a softening of its stance. “We’ve got a ways to go yet, we’re not there. I can’t speak for the chair but as I watched the press conference, that was the signal – to quit paying attention to the pace and start paying attention to where the end point is going to be.”
Downunder, following US CPI print, every ASX sector gained ground. Tech stocks were the biggest gainers, climbing 5.0 per cent as Afterpay owner Block gained 11.5 per cent and Wisetech Global soared 10.4 per cent. The interest-rate sensitive property sector climbed 4.1 per cent, with warehouse owner Goodman Group gaining 6.0 per cent and Stockland rising 4.2 per cent.
Meanwhile the ACTU wants the Reserve Bank of Australia’s mandate overhauled to focus on real wage growth and job creation, and for a trade union official to potentially join a reworked board. Australian Council of Trade Unions secretary Sally McManus told an independent panel considering the RBA’s operations that a greater understanding of the labour market and wage setting systems was needed on the board, suggesting the bank’s remit be broader than just inflation control.
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