ASX lifts as oil rebounds above $US100 a barrel, US inflation hits new 40-year high

An overnight surge in oil prices has boosted Australian energy stocks, leading to a better-than-expected start for the local share market.

The ASX 200 index was up 0.2 per cent to 7,472 points, by 10:25am AEST on Wednesday.

This was despite a weak lead from Wall Street as the latest data showed US consumer prices rising at their fastest pace in 40 years.

Energy was the best performing Australian sector, driven by the rising share price of Santos (+2pc) and Woodside Petroleum (+1.7pc), as crude oil prices rebounded above $US100 a barrel.

Shares in A2 Milk (+2pc), Blackmores (+1.8pc), Rio Tinto (+1.2pc) and Graincorp (+1pc) also made solid gains in morning trade.

The Australian dollar was trading at 74.5 US cents after rising by 0.3 per cent.

Although Wall Street began its day higher, investor sentiment turned negative in afternoon trade.

This was shortly after US Federal Reserve governor Lael Brainard made some remarks about the central bank needing to “expeditiously” grapple with decades-high inflation.

A woman with blonde hair speaking in front of a microphone.
Lael Brainaird says bringing inflation down to 2pc is the US Federal Reserve’s priority.(Reuters/Brian Snyder)

Overnight, the S&P 500 closed 0.3 per cent lower at 4,398 points.

The Nasdaq Composite fell 0.3 per cent to 13,372, while the Dow Jones Industrial Average dropped 0.3 per cent to 34,220.”

The comments coming out from Fed officials have been more hawkish than the markets have anticipated,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“[Brainard] has generally been nondescript, but now she’s more forceful in her commentary, and that’s getting people to sit up and take notice.”

Aggressive rate hikes to tame inflation

US consumer prices jumped 8.5 per cent compared to a year ago, according to the Labor Department’s figures for March. It was the fastest rise in the cost of living since December 1981.

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