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Given yet another set of fresh Wall Street records, and an overnight surge in iron ore and oil prices, the Australian stock market has all the necessary ingredients for a higher open.
Market snapshot at 7:45am (AEST):
- ASX SPI 200 futures +0.7pc to 5,705, ASX 200 (Tuesday close) +0.7pc to 5,727
- AUD: 79.31 US cents, 60.88 British pence, 68.12 euro cents, 88.77 Japanese yen, NZ$1.07
- US: Dow Jones +0.5pc at 21,613, S&P 500 +0.3pc at 2,477, Nasdaq -0.2pc at 5,931
- Europe: FTSE +0.7pc at 7,335, DAX +0.5pc at 12,264, Eurostoxx50 +0.6pc at 3,474
- Commodities: Brent crude +4.3pc at $US50.71/barrel, spot gold -0.5pc at $US1,249/ounce, iron ore +2.4pc at $US69.48/tonne
US equities were mainly boosted by strong corporate earnings.
Meanwhile, depending on how local investors react to today's economic news, the Australian dollar may have another opportunity to crack the 80 US cent mark.
What happened on Wall St?
The S&P 500 and Nasdaq reached fresh highs - even with the latter's flat performance - up by just 1 point.
Half the S&P sectors finished in stronger positions - with energy and financials on top, while healthcare was the worst performer.
The stocks which lifted the Dow Jones index the most were McDonald's and Caterpillar, which were up by about 5 and 6 per cent respectively.
Those companies posted better-than-expected second-quarter earnings.
Around 180 S&P 500 companies report their earnings this week - including Amazon, Facebook, Coca-Cola and Boeing.
The Federal Reserve has also kicked off its two-day on monetary policy meeting.
However, analysts are betting that the Fed will not raise interest rates tomorrow due to subdued inflation in the US.
Energy was the best performing sector, courtesy of the flow-on effect from oil prices rising for the second straight day and hitting a seven-week high.
The positive sentiment in oil follows a meeting amongst OPEC members to discuss a deal to limit output.
At a meeting in St Petersburg, Russia, Saudi Arabia's energy minister pledged to help contain the global oversupply of oil by reducing its crude exports by 1.8 million bpd (barrels per day) until March 2018, and possibly beyond.
Nigeria, which has been exempt from the output cuts, also volunteered to join the deal by either capping or reducing its output from 1.8 million bpd - after it stabilises at that level.
Australia today
The focus today will the Bureau of Statistics' second-quarter consumer price index (CPI) figures.
According to economists polled by Reuters, quarterly inflation is expected to rise 0.4 per cent, bringing the yearly rise to 2.2 per cent.
"Today's CPI figures we expect will likely reveal almost unchanged headline and core inflation rates," said NAB's David de Garis.
He also expects the inflation figures to be "bang on the RBA's May SoMP [Statement on Monetary Policy] forecasts of 2 per cent for headline and 1.75 per cent for underlying inflation".
The other economic agenda item is RBA governor Philip Lowe's speech on "The Labor Market and Monetary Policy" in Sydney.
Ms Emmett also expects "Australian dollar volatility ... to pick up today".
"Any miss on inflation is likely to see the currency test technicals on the downside, although a move down could be short-lived given governor Lowe's tendency to be relatively positive."
Topics: stockmarket, currency, money-and-monetary-policy, company-news, australia