US equities closed higher on Tuesday with the Dow Jones posting a positive close for a 12th straight session, the longest winning streak in 6-years. The tech-heavy Nasdaq and S&P500 also closed higher as investors respond to the latest earnings results and await the key interest rate decision out of the Federal Reserve tomorrow.

In Europe, markets also mostly rallied on Tuesday as investors in the region also responded to earnings results from big names including Unilever which beat analysts’ expectations to report a 7.9% rise in underlying Q2 sales. The European Central Bank also meets on Thursday where it is widely expected that a 25-basis point rate hike will be announced. The STOXX600 rose 0.47% on Tuesday, buoyed by mining stocks rising on the back of new Chinese stimulus measures, Germany’s DAX added 0.13%, the French CAC fell 0.16% and, in the UK, the FTSE100 added 0.17%.

China’s leaders pledged on Monday to step up the government’s policy support for the extremely weak post-COVID recovery in the region, with a focus on boosting domestic demand and aiding recovery in the building sector. Looking at China’s Q2 growth rate data, the world’s second largest economy grew only 0.8% QoQ vs 2.2% growth in Q1, in a sign economic recovery is stalling. 

The local market rallied almost half a percent yesterday boosted by the iron ore miners jumping on the back of speculation that China will introduce further stimulus policy to reignite the nation’s recovery post-pandemic, causing a rise in the price of iron ore today. BHP added 3.84% yesterday, Fortescue rallied 4.55% and Rio Tinto jumped 3.4%.

Technology stocks weighed on the market yesterday with the sector closing down 0.25% on the back of the Nasdaq-100’s special rebalancing which is aimed at reducing the concentration of heavyweight companies that account for nearly half of the index’s weight. Stocks involved in the rebalancing include Microsoft, Apple and Tesla which account for 43.8% of the index weight coming down to 38.5% as a result of the rebalancing.

What to watch today:

• Ahead of local trading session here is Australia, the SPI futures are anticipating the ASX to open the midweek trading session up 0.26%.
• Taking a look at commodities, the price of wheat hit a 5-month high yesterday after Russia launched a drone attack at a port in the Ukraine, destroying a grain hangar storing wheat grain. Oil is up 0.88% at US$79.43/barrel, gold is up almost half a percent at US$1963/ounce, and iron ore is down 0.43% at US$115.50/tonne.
• Locally today, Australia’s inflation data for Q2 is out just before midday which may cause some market movements pending on how the data reads. If the reading comes in, in-line with consensus expectations of a decline in the annual inflation rate to 6.2%, we could see the market rally in anticipation of rate pauses to come, however if inflation remains around 7% or higher than expected.
• AU$1.00 is buying US$0.68, 95.68 Japanese Yen, 52.36 British Pence and NZ1.09.
  
  

Trading Ideas:

• Bell Potter has increased the price target on Mader Group (ASX:MAD) from $5.10 to $6.10 and maintain a hold rating on the leading provider of specialised labour services, following the release of the company’s Q4 results including a 12th consecutive quarter of revenue growth, underpinned by growth across Australian operations and reflecting robust demand for Mader’s core mechanical services and new vertical service offerings, as well as North American penetration and growth in Canada.
• And Trading Central has identified a bullish signal on BHP Group (ASX:BHP) following the formation of a pattern over a period of 59-days which is roughly the same amount of time the share price may rise from the close of $45.82 to the range of $50-51 according to standard principles of technical analysis.