The Australian sharemarket is expected to open higher today, following gains on Wall Street overnight.
Interest rate decision looms
The Reserve Bank of Australia (RBA) is set to announce its interest rate decision next week. Money markets have priced in a 95% probability of a 25-basis-point rate cut which would lower the cash rate from 4.35% to 4.1%.
In the US, the blue-chip Dow Jones rose 0.3% to 44,443 points, while the broader S&P 500 index gained 0.7% to 6,069.5 points.
The Nasdaq outperformed, advancing 1.1% to 19,737 points as heavyweight technology stocks rebounded from last week’s declines and steelmakers surged following comments from the president about imposing 25% tariffs on steel and aluminium imports.
Among major steel producers, Nucor gained 5.6%, Steel Dynamics rose 4.9%, Cleveland-Cliffs jumped 17.9% and Alcoa advanced 2.2%. United States Steel climbed 4.8% after Japan’s Chief Cabinet Secretary stated that Nippon Steel was considering altering its acquisition plans.
McDonald’s shares jumped 4.8% after posting a surprise rise in global comparable sales for the fourth quarter. AI chipmakers Nvidia and Broadcom gained 2.9% and 4.5%, respectively, while Super Micro Computer soared 17.6% ahead of a business update.
European sharemarkets closed at all-time highs on Monday, supported by a 1.4% gain in energy stocks. London-listed BP surged 7.4% — its biggest one-day rise in more than two years—on reports that activist investor Elliott Investment Management had taken a stake in the company, fuelling expectations of strategic changes.
The FTSEurofirst 300 index rose 0.5%, while the UK FTSE 100 gained 0.8%.
Currencies, bond markets and commodities
US Treasury yields were little changed with the 10-year yield up 1 basis point to 4.50% while the 2-year yield held steady at 4.27%. The market is bracing for the US Treasury’s US$125 billion bond issuance this week.
Currencies were mixed. The euro slipped to US$1.0305 while the Australian dollar rose slightly to US62.80 cents. The Japanese yen firmed to JPY151.95 per US dollar.
Global oil prices rebounded after three consecutive weeks of losses. Brent crude rose 1.6% to US$75.87 per barrel while US Nymex crude climbed 1.9% to US$72.32 per barrel.
Gold futures jumped 1.6% to US$2,934.40 per ounce, driven by safe-haven demand amid trade war and inflation concerns.
Iron ore futures edged up 0.6% to US$106.97 per tonne, supported by signs of recovering demand from China and declining shipments from major suppliers.
Looking ahead
Investors will focus on Australia’s upcoming business and consumer confidence surveys. Earnings reports from Breville, CSL, Region, SGH, Seven West Media and Vulcan Steel are expected.
In the US, the NFIB small business optimism index is due, while major companies including Coca-Cola, DoorDash, Lyft, Shopify and Super Micro Computer will report earnings. Federal Reserve Chair Jerome Powell is also scheduled to speak.
Market snapshot
- ASX 200 futures: +0.3% to 8,463 points.
- Australian dollar: +0.1% to US62.7 cents.
- Dow Jones: +0.3% to 44,443 points.
- S&P 500: +0.7% to 6,069.5 points.
- Nasdaq: +1.1% to 19,737 points.
- FTSE 100: +0.8% to 8,767 points.
- EuroStoxx 50: +0.6% to 5,358.3 points.
- Spot gold: +1.5% to US$2,904/ounce.
- Brent crude: +1.3% to US$76.02/barrel.
- Iron ore: US$106.73/tonne.
- Bitcoin: +0.7% to US$97,110.
Source: ABC