The four-week rally in US stockmarkets stalled this week following an upside surprise in UK inflation that rekindled the fears that dominated the first half of the year.
There was no stopping the ASX200, however, as it traded to a 10-week high supported by better-than-expected earnings, including a thumping result from index heavyweight BHP.
Here are the top five things that influenced the markets this week:
1. BHP, the Big Australian, hits it out of the park
BHP, which accounts for a monstrous 10 per cent weighting in the ASX200, reported an underlying profit of $US21.3 billion ($30.7 billion), up 39 per cent from 2020.
The Big Australian also reported a second-half dividend of $US1.75 ($2.50).
This took the full-year payout to $US3.25 ($4.70), better than the market expected.
BHP shares went up 4.5 per cent after the result.
2. Messy labour force data
The Australian jobs report for July provided a messy mix.
The unemployment rate fell to a 48-year low of 3.4 per cent, despite the economy shedding 40,900 jobs.
The distortions are likely due to the survey falling during school holidays and will do little to dissuade the RBA that higher interest rates are required to cool a red-hot labour market.
3. UK inflation hits 40-year high
Headline UK consumer price index raced to +10.1 per cent year over year in July.
The result was up from the 9.4 per cent experienced the previous month and well above the 9.8 per cent that was expected.
The data sent UK bond yields sharply higher and the UK stockmarket sharply lower as investors prepare for further Bank of England rate rises.
4. RBNZ deliver a hawkish 50 point rate hike
The Reserve Bank of New Zealand raised its official cash rate by 50 basis points to 3 per cent.
It was the RBNZ’s fourth straight 50-point hike in a row, in a tightening cycle that started back in October.
In its fight to tame inflation, the RBNZ raised the projection for the peak interest rate to 4.1 per cent by the second quarter of 2023.
5. Crude oil hits a six-month low
Crude oil hit a six-month low earlier this week near $US85 ($123) per barrel.
The price drop came amid concerns that the global slowdown will weigh on demand.
It also comes as prospects of a nuclear deal with Iran increase, which would lead to an increased supply of Iranian oil.
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