Morning Wrap: ASX 200 to rise, US markets close at record highs, Warren Buffett discloses his latest purchase

ASX 200 futures are down 9 points to 7,879, as of 8:40am AEST.

The dream of a soft landing in the world's largest economy is still on course. US inflation numbers for April beat expectations on the headline and core measures. Combine this with flat retail sales and markets have interpreted it as a sign that the Fed's interest rate policy is working. All the major US indices closed at record highs and we're expecting to see that buoyant sentiment flow through to our markets today.

On the stocks front, local earnings continue to trickle in. Among the names reporting are Aristocrat Leisure, GrainCorp and Incitec Pivot. And Warren Buffett has been buying again - this time, revealing a US$6.7 billion stake in home security provider Chubb.

Let's dive in.

Overnight Summary

Tue 21 May 24, 8:56am (AEST)

US Sectors

Tue 21 May 24, 8:56am (AEST)

S&P 500 SESSION CHART

To make a pun out of the NSYNC song, Buy Buy Buy! (Source: TradingView)

OVERNIGHT MARKETS

• Major stock indexes all close at new record highs after April CPI reading sparks relief

• U.S. consumer prices rose 0.3% in April, less than expectations

• S&P 500 jumps 1% to post record close, ending session above 5,300 for the first time

• European markets close higher on U.S. inflation data; Finnish oil refiner Neste's shares fall 14% following a profit warning

• Treasury yields drop after cool monthly consumer inflation data

• U.S. crude oil holds above $78 a barrel as stockpiles fall, IEA reduces 2024 oil demand growth forecast, further expanding gap with OPEC regarding oil demand outlook

• Copper hits record high on data center build up, EVs but iron ore down on softer China demand, latest US tariff hikes

• Gold climbs as cooling U.S. inflation bolsters Fed rate cut optimism

• Bitcoin rises above $65,000 after CPI report shows inflation easing in April

INTERNATIONAL STOCKS

• Palo Alto Networks will buy IBM’s QRadar cloud software assets

• Alphabet closes at all-time high as Google rebounds from disastrous start to AI race

• Buffett’s Berkshire reveals insurer Chubb as confidential stock it’s been buying, Chubb shares rise 6% in US trading

• Cisco reports strong results even as revenue drops most in 15 years

• Tesla’s Chinese rival Nio launches a new brand and car that undercuts the Model Y by $4,000

• GameStop, AMC tumble as meme stock rally fizzles after just two days

• Dell surges 11% on optimism it has secured big AI server orders

CENTRAL BANKS

• BoJ's surprise reduction in bond buying earlier this week sparks rate hike bet speculation

• ECB's Villeroy says June rate cut very likely; ECB's Rehn notes inflation needs to come closer to 2% target

• Argentina central bank cuts interest rate to 40% as inflation slows

Author's Note: Following the US CPI print, most major research houses kept their existing interest rate calls. The consensus believes the first cut will come in September.

ECONOMY

• Hopes for US soft-landing on the line with US inflation data today the big focus

• Japan economy likely to have contracted in Q1, complicating BOJ efforts for policy normalisation

• European Commission sees Eurozone soft landing on track, inflation easing quicker but wider deficit

• Australia likely to return to budget deficit next year as government goes on spending spree

ASX TODAY

• As mentioned, Aristocrat Leisure, Incitec Pivot, and GrainCorp are handing down earnings today. Last week, GrainCorp shares fell by more than 7% in two days after it issued an earnings downgrade for FY24, expecting underlying net profit after tax to come in between $60 million to $80 million.

• Citi's sell-side team has already made some moves, downgrading the price target of Xero from $159 to $144.75 despite forecasting revenue growth of 21%.

• Finally, this survey from CommSec followers on X caught our eye. It's a small sample but it's interesting nonetheless.

Industry ETFs

Thu 16 May 24, 8:21am (AEST)

Key Events

Companies trading ex-dividend:

• Autosports Group (ASG) – 16 May - $0.10

Economic calendar (AEST):

• 9:40am – AUD – RBA assistant governor Sarah Hunter speaks

• 9:50am – JPY – Preliminary GDP

• 11:30am – AUD – Employment change

• 2:30pm – JPY – Revised industrial production

• 6:00pm – EUR – ECB Financial stability review

• 10:30pm – USD – unemployment claims, building permits, Philly Fed manufacturing, housing starts, import prices

This Morning Wrap was written by Hans Lee and Chris Conway.