The Australian sharemarket is expected to open higher after Wall Street snapped a three-session losing streak, supported by gains across technology, semiconductor and materials stocks.
ASX 200 futures were 37 points, or 0.4%, higher at 8,978 at 6.41 am AEST.
The positive signal comes despite oil prices remaining elevated as renewed military exchanges between the US and Iran continue to restrict global supply and fuel inflation concerns.
ASX falls 1% as rate concerns return
The S&P/ASX 200 fell 88.3 points, or 1%, to 8,978.40 on Wednesday, while the All Ordinaries dropped 1.1% to 9,160.30.
Technology and mining stocks led the retreat after stronger-than-expected economic growth increased speculation that the Reserve Bank of Australia could raise interest rates again.
The Australian economy expanded 0.4% during the June quarter, ahead of expectations for 0.3% growth, leaving the annual growth rate at 2.1%.
Several heavyweight companies, including BHP, Coles and Woodside Energy, will trade ex-dividend today. Their shares may open lower to reflect the value of the detached payments, potentially limiting gains in the broader index.
July’s goods trade balance and a speech by RBA assistant governor Brad Jones will also be closely watched.
Wall Street ends three-day losing streak
US stocks recovered as investors returned to areas of the market hit during the recent risk-off sell-off.
The Dow Jones Industrial Average rose 295.07 points, or 0.6%, to 53,061.95. The S&P 500 gained 0.5% to 7,666.60 and the Nasdaq Composite advanced 0.5% to 26,217.83. The small-cap Russell 2000 outperformed with a 1.1% gain. All three major US indexes remained lower for the week.
Materials was the strongest of the S&P 500’s 11 sectors, while real estate was the only sector to finish lower.
Semiconductor stocks also rebounded. Nvidia climbed 3.2%, Micron Technology gained 2.4% and Qualcomm added 2%.
Dell Technologies surged 15.8% after reporting strong demand for artificial intelligence infrastructure and raising its annual revenue and earnings forecasts. Alphabet edged 0.5% higher after defeating a US government attempt to break up Google’s advertising technology business.
Meta Platforms added 2.5% following the release of its updated Muse Spark 1.3 artificial intelligence model, while Uber Technologies gained 1.6% after announcing plans to cut about 10% of its workforce.
After the closing bell, Broadcom reported stronger-than-expected earnings and an 86% increase in quarterly revenue to US$29.59 billion. However, its shares slipped more than 2% in extended trading as investors assessed its outlook. Broadcom’s artificial intelligence semiconductor revenue jumped 221% to US$16.7 billion.
Jobs data cools bond yields
The US 10-year Treasury yield eased 1 basis point to 4.78%, ending five consecutive sessions of increases. The two-year yield fell 2 basis points to 4.37%.
The pullback followed weaker-than-expected private employment data. The ADP National Employment Report showed private employers added 38,000 jobs in August, below the 48,000 increase anticipated by economists.
The data provided some relief from expectations of tighter monetary policy, although investors remain focused on Friday’s broader US employment report and next week’s inflation figures.
European markets decline
European sharemarkets finished lower as investors assessed persistent inflation risks from elevated oil prices and rising borrowing costs.
The FTSEurofirst 300 fell 0.2% to 2,580.87, while the UK’s FTSE 100 declined 0.3% to 10,756.45.
Healthcare stocks were among the stronger performers, while retail and utility companies lagged.
Italian gaming group Lottomatica dropped 9% after agreeing to acquire Spanish rival Cirsa Enterprises in an all-share transaction valued at €2.8 billion.
Australian dollar strengthens
- The Australian dollar gained 0.3% to US71.68 cents, up from US71.42 cents on Wednesday afternoon.
- The euro was steady at US$1.1588.
- The Japanese yen strengthened 0.9% to ¥158.69 per US dollar amid speculation that Japanese authorities could intervene in currency markets.
- Bitcoin gained 0.5% to trade near US$77,398, finding some support from the improvement in risk sentiment and easing Treasury yields.
Oil extends gains
Brent crude rose 1% to settle at US$95.63 a barrel, while West Texas Intermediate added 0.9% to US$91.01.
Oil remains supported by renewed US-Iran military strikes and continuing disruption to supplies through the Strait of Hormuz. Chevron edged higher after confirming plans to expand its operations in Venezuela.
Gold futures recovered from a near one-month low as the US dollar and Treasury yields retreated, rising 0.4% to US$4,414.60 an ounce.
- Spot gold traded at US$4,388.73.
- Iron ore futures fell 1.6% to US$97.72 a tonne on expectations of strong supply during the remainder of the year.
- Copper eased 0.1% to US$6.501 a pound, while aluminium gained 0.2% to US$3,419.25 a tonne.
What to watch
Australia’s July goods trade balance and the speech from RBA assistant governor Brad Jones will headline the domestic calendar.
In the US, investors will receive the ISM services purchasing managers’ index, the trade balance and weekly jobless claims ahead of Friday’s closely watched employment report.