ASX futures point to a modestly firmer open, with the market expected to edge higher following supportive leads from Wall Street, although gains may be tempered by ongoing geopolitical risks and interest rate uncertainty. ASX 200 futures were pointing up 12 points or 0.1 per cent to 8669 near 7am (AEDT).
The ASX 200 closed 30.90 points higher yesterday, up 0.4% to 8614.30, after the Reserve Bank of Australia (RBA) delivered a 25 basis point rate increase in a closely split 5-4 board decision, easing concerns that borrowing costs could rise more aggressively in coming months.
The benchmark index had traded flat for much of the day before the decision, with 6 of 11 sectors ending the session in positive territory.
Markets took the narrow vote as a sign the central bank may be nearing the end of its tightening push. Traders are now pricing in two more rate rises by Christmas, down from three before the announcement.
The RBA also warned that domestic inflation risks could intensify if conflict in the Middle East continues to drive fuel prices higher.
Financials were among the session’s strongest performers, as higher rates are expected to support bank earnings through improved net interest margins.
National Australia Bank, the first major lender to pass on the full rate rise, gained 0.9% to $47.46, while Westpac added 1.4% to $41.49.
Materials also bounced back after Monday’s heavy selling, supported by a 1.2% rise in Singapore iron ore futures to US$108.75 a tonne. BHP rose 1.1% to $49.73 and Fortescue added 1.3% to $19.95.
Gold names outperformed as investors rotated into the sector on the back of stronger bullion prices and fresh broker support.
UBS expanded its Australian gold coverage and assigned new buy ratings to several stocks, helping fuel sharp gains across the sector.
Pantoro Gold jumped 12% to $3.82, Ora Banda Mining rose 9.1% to $1.50, Catalyst Metals gained 7.6% to $6.62 and Westgold advanced 4.9% to $6.24.
Energy stocks delivered a mixed performance despite another rise in crude prices, as investors weighed the prospect of prolonged supply risk against attempts to ease near-term shortages.
Santos edged 0.3% higher to $7.71, while Woodside fell 0.7% to $31.42.
Coal miners remained under pressure after recent gains. New Hope slumped 6.4% to $4.96 after posting half-year net profit of $54.3 million, well below market expectations of $80 million.
Rate-sensitive sectors moved lower, reflecting renewed pressure on valuation multiples and discretionary spending expectations.
WiseTech Global fell 3% to $45.23, Xero dropped 1.7% to $77.62 and Wesfarmers lost 1.6% to $75.44.
Wall Street edges higher as investors await Fed and rotate into travel, financials
US markets closed higher on Tuesday as investors looked ahead to the Federal Reserve’s interest rate decision, while rising oil prices kept inflation and growth risks in focus.
The Dow Jones Industrial Average finished up 0.1%, the S&P 500 gained 0.3% and the Nasdaq rose 0.5%.
Travel and airline stocks rebounded after Delta Air Lines and American Airlines raised revenue guidance for the current quarter. Delta climbed 6.6% and American rose 3.4%, while Norwegian Cruise added 3.3% and Expedia advanced 4.4%.
Financials also recovered after recent weakness tied to private credit concerns. Blackstone rose 5% and Apollo Global added 6%.
Uber gained 5% after unveiling plans to launch robotaxis in 28 cities next year using Nvidia’s autonomous driving software.
Among decliners, Eli Lilly fell 6.4% following a broker downgrade, while Honeywell slipped 1.4% after warning the Middle East conflict could affect first-quarter revenue.
US Treasury yields eased, with the 10-year yield down 2 basis points to 4.20% and the 2-year yield 1 basis point lower at 3.67%.
European shares push higher as investors balance geopolitics against ECB policy outlook
European markets posted modest gains as traders assessed the economic fallout from the Middle East conflict and positioned ahead of the European Central Bank’s policy decision later this week.
The FTSEurofirst 300 index rose 0.7%, while the UK FTSE 100 added 0.8%.
Italy was among the strongest markets, up nearly 1%, while Germany was little changed after investor morale weakened more than expected in March.
Utilities, typically seen as a defensive pocket of the market, rose 1.6%, while energy stocks remained in favour as oil prices held above US$100 a barrel. Shell climbed 1%.
Defence stocks, which had rallied strongly in recent weeks, gave back ground and capped broader upside.
US dollar softens as investors trim defensiveness ahead of major central bank calls
Major currencies strengthened against the US dollar as investors adopted a more measured risk stance ahead of key central bank decisions.
- The euro rose to US$1.1536.
- Tthe Japanese yen strengthened to JPY159.03.
- The Australian dollar gained 0.6% to US$0.7104.
Oil extends rally on supply fears, while gold and iron ore remain supported
Commodity markets remained dominated by geopolitical risk, with oil prices climbing sharply on fears the Middle East conflict could lead to broader supply disruptions.
Brent crude rose between 3.2% and 3.6% to around US$103 a barrel after reports that Israel killed 2 more senior Iranian leaders and Iranian drones struck energy facilities in the UAE and Iraq.
TD Securities said the market may be moving from a period of energy abundance to one of scarcity as instability in the region deepens.
- Gold futures edged 0.1% higher to US$5,008 an ounce as investors continued to seek safe-haven exposure ahead of the Fed decision.
- Base metals were mixed. Copper fell 1.1% amid concern that war-related uncertainty and rising inventories could weaken demand, while aluminium gained 0.1%.
- Iron ore futures rose 0.4% to US$105.77 a tonne, supported by signs of improving steel demand in China.
ASX futures signal firmer open as markets look to Fed decision and local data
Australian shares are set to open modestly higher, with ASX 200 futures up 12 points, or 0.1%, to 8669 near 7am AEDT.
Investors are now turning to the US Federal Reserve’s interest rate decision, where rates are widely expected to be left unchanged, while in Australia attention will also be on the Westpac Leading Index for February.