ASX Opens Higher, Defying Global Tech Sell-Off Amid Inflation Concerns

Market snapshot

D By David Chau

ASX 200: +0.2% to 8,807 points

Australian dollar: -flat at 69.17 US cents

Wall Street: Dow Jones (-0.1%), S & P 500 (-1.4%), Nasdaq (-2.2%)

Europe: Stoxx 600 (-0.7%), DAX (-1%), FTSE (-0.1%)

Asia: Nikkei (+0.1%), KOSPI (+4%)

Spot gold: steady at $US4,107/ounce

Brent crude: -0.5% to $US76.68/barrel

Iron ore: +0.1% at $US99.90/tonne

Bitcoin: +0.7% to $US62,843

Prices current around 10:15am AEST

Live updates on the major ASX indices:

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ASX opens slightly higher, defying global tech sell-off

D By David Chau

The Australian share market is off to a mildly positive start this morning.

The ASX 200 was up 0.2% to 8,802 points by around 10:15am AEST.

The broader All Ords index rose by a similar percentage to 9,008 points.

So local shares have decided to head in a different direction to Wall Street and Asian markets, which recorded massive losses due to a tech and AI sell-off in the past couple of days.

I'll have more detail for you shortly!

Is monthly inflation rising or falling? De-mystifying headline and core inflation

D By David Chau

The May inflation figures, which the ABS will publish later this morning, will be confusing for a lot of people. So I'll try to de-mystify it for you:

To quickly recap, economists are predicting annual headline inflation will rise 4.3% (slightly higher than April's result of 4.2%).

But monthly inflation is likely to fall by 0.4%, which would be a major drop compared to April's result (an increase of 0.4%).

That's right, you read correctly! Cost of living pressures are likely expected to increased sharply over a 12-month period, but decreased between April and May.

And another word for negative inflation is deflation.

There's no doubt those results will have been impacted by the Albanese government's temporary cut to the fuel excise.

Core inflation looks very different

But when you ignore the most extreme price swings from the inflation data, the core (or trimmed mean) inflation figures tell a very different story:

Annual core inflation is expected to have risen 3.5% (up from April's result of 3.4%)

Monthly core inflation is forecast to have lifted 0.3% (unchanged since April).

Basically, when last month's significant fall in petrol prices is excluded from the inflation tally, the picture isn't as rosy.

Cynical people might say government policies to bring down energy or fuel prices temporarily is simply a way to mask how bad the inflation problem is, and reduce the political heat on themselves.

So that's why economists like to focus on the trimmed mean figure instead, because they see it as a more accurate, and less volatile, gauge of where cost of living is headed.

Oil prices sink to lowest level since the start of US-Israeli war against Iran

D By David Chau

While the Australian dollar and Wall Street's tech and AI stocks were sold off after a bout of pessimism and profit-taking overnight, oil traders are not feeling quite the same gloom.

In fact, oil prices fell to a four-month low with Brent crude futures down 1.1% to $US77.08 per barrel.

US West Texas Intermediate crude futures dropped 0.9% to $US 73.21 a barrel.

A fall in oil prices — to their lowest level since the start of the US-Israeli war against Iran — indicates people are feeling hopeful that there will be a longer-term resolution that will eliminate the threat of a global fuel shortage.

There is some debate, however, about whether these expectations are realistic given Iran has shown it can easily block the Strait of Hormuz, a crucial oil and gas shipping route, at any time.

Plus, it will take at least several months, or years, for the neighbouring Gulf states to repair the damage that Iran's missile and drone strikes have caused to their oil and gas infrastructure and for their energy exports to return to pre-war levels.

NAB senior economist Taylor Nugent has outlined some of the complications ahead in a note to the bank's clients:

"Traffic in the strait remains far from normal, but some positive signals have come from more tankers transiting with satellite signals switched on.

"India, meanwhile, sent two ships back to the region for the first time since February. And the International Maritime Organization said it had received safety guarantees allowing hundreds of ships to exit the Persian Gulf.

"Iran and Oman said they’ll begin work on finding an agreement over the future administration of the Strait of Hormuz, including the cost of managing transit.

"US-Iran discussions have seen progress including agreement to form working groups on implementing the MoU [memorandum of understanding], but public comments from both sides have differed.

"[US President Donald] Trump said $US12 billion in unlocked financing will be controlled by the US and used to purchase American products, and Iran had agreed to 'highest level nuclear inspections long into the future'.

"Both of which were rejected by Iran."

Chris Bowen asks energy regulator to investigate power price hikes

S By Stephanie Chalmers

Following on from our reporting of power bill increases, we can confirm Energy Minister Chris Bowen has asked the Australian Energy Regulator (AER) to investigate whether retailers have breached regulations with increases to supply charges that are catching consumers out.

The price rises are not confined to one or two retailers, but appear to be across most major power providers.

ABC News has seen price increase notices for customers from five of the largest electricity providers, plus a couple of popular smaller retailers.

You can read more from energy reporter Daniel Mercer:

Why your energy bill may rise, even though the regulator says prices are falling

D By David Chau

As I mentioned earlier, electricity users across Australia have been receiving notices about their rates going up.

That's despite the default offer falling in many markets across the nation.

Richard Foxworthy from comparison service Bill Hero says some retailers appear to be raising their cheapest electricity price plans to claw back some profit.

The Australian Energy Regulator says default offers are merely a safety net for consumers, and it's up to retailers to set their own prices.

The regulator urged people to shop around and says they are free to change their energy plan at any time.

For more, you can watch this story by Daniel Mercer, which aired on The Business last night:

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Markets recap: Alan Kohler's finance report

D By David Chau

In case you need a refresher before the Australian market opens, I can certainly recommend Alan Kohler's finance report from last night's 7pm News bulletin.

Alan made some interesting observations about the share price of tech billionaire Elon Musk's recently listed company SpaceX.

In particular, its share price peaked at $US225 last Tuesday and has plummeted by 31% since then. So it has fallen into a 'bear market' in one week!

In Australian dollar terms, its value dropped by $1 trillion in that short period of time (which is the equivalent of four Commonwealth Banks):

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Australian dollar sinks to almost 69 US cents, its weakest level in two months

D By David Chau

The Australian dollar is recording steep falls across many of the world's major currencies.

It has dropped 1.2% to 69.15 US cents, its lowest level since early April.

It's also down by around 1% or more against many other currencies like the British pound, euro, Japanese yen, Indian rupee, Indonesian rupiah, Chinese yuan and Singaporean dollar.

The local currency tends to do poorly when global investors are in a pessimistic mood.

This latest 'risk aversion' appears to be linked with the global tech sell-off, on concerns about overvalued AI stocks — leading to steep losses on Wall Street's Nasdaq Composite (-2.2%) today, along with South Korea's KOSPI (-10%) and Japan's Nikkei (-3.6%) yesterday.

Meanwhile, the US Dollar Index, which tracks the greenback against major currencies, is slightly higher. It's because markets are now pricing in a 85% chance of the Federal Reserve lifting interest rates by September.

In fact, at 101.4 points, that's the strongest the American currency has been in 13 months.

So, apart from the 'risk off' mood from the tech sell-off, US dollar strength is another reason for the Aussie dollar's poor performance today.

'Confusopoly' blamed as power bill messages befuddle consumers

D By David Chau

Across large parts of Australia — from Queensland to Victoria and South Australia — thousands of people have received notices from their electricity providers informing them of upcoming price hikes.

That's despite the default offer — set by the Australian Energy Regulator in Queensland, NSW and SA — falling in many markets.

In some cases, households are being whacked with hikes to their daily supply charge of more than 60%.

These price increases have left many of those consumers angry at what they say is a contradictory and confusing market.

For more on this important development, here's the story by Daniel Mercer and Olivia Sanders:

ASX to open higher despite Wall Street's tech sell-off

D By David Chau

The Australian share market is likely to start its day slightly higher, with ASX futures up 0.4% this morning.

That's despite a global tech sell-off, which resulted in steep losses on Wall Street overnight.

On a day like this, it certainly helps that Australia doesn't have much in the way of huge tech companies. Instead, the local share market is dominated by banks and miners.

Semiconductor, chips and computer memory stocks like Sandisk (-13.6%), Micron (-13.2%), Marvell (-9.4%) and Nvidia (-4.1%)

It appears investors are getting increasingly worried about the sharp rise in debt-funded AI spending, particularly with the US Federal Reserve recently adopting a more "hawkish" tone — and more likely to lift interest rates by the end of the year.

The Dow Jones index slipped by 0.1%, while the S & P 500 dropped 1.4% and the tech-heavy Nasdaq Composite fell by 2.2%.

Market snapshot

D By David Chau

ASX futures: +0.4% to 8,789 points

ASX 200 (Tuesday close): -0.3% to 8,787 points

Australian dollar: -1.2% to 69.16 US cents

Wall Street: Dow Jones (-0.1%), S & P 500 (-1.4%), Nasdaq (-2.2%)

Europe: Stoxx 600 (-0.7%), DAX (-1%), FTSE (-0.1%)

Spot gold: -1.9% to $US4,110/ounce

Brent crude: -1.3% to $US76.93/barrel

Iron ore: +0.1% at $US99.90/tonne

Bitcoin: -3.1% to $US62,389

Prices current around 7:30am AEST