US stocks ended higher again on Wednesday, with the tech-heavy Nasdaq Composite leading the way, pointing to a strong start on the ASX this morning.
Yesterday, the ASX put in its best performance in four weeks, gaining 0.9% to close 68.4 points higher at 7,392.7.
The gains came after Wall Street set new records and local traders digested the Reserve Bank’s cash rate announcement, deciding it was a pragmatic move that showed a growing economy.
ASX futures were up 0.3% to 7,388 at 6.30am AEDT.
Here’s what we saw:
- The Aussie dollar lifted from lows near US74.15 cents to highs near US74.58 cents and was near US74.50 cents at the US close.
- The New Zealand dollar strengthened after its unemployment numbers came in at a 14-year low of 3.4%.
- Global oil prices slid over 3% on Wednesday ahead of the OPEC+ meeting on Thursday. US crude inventories rose by 3.29 million barrels last week, more than expected, but gasoline stocks fell to their lowest level since November 2017.
- The Brent crude price fell by US$2.73 or 3.2% to US$81.99 a barrel.
- The US Nymex crude price lost US$3.05 or 3.6% to US$80.86 a barrel.
- Base metal prices were mixed on Wednesday with nickel down 2.3% and aluminium losing 1.4% - down by the most.
- Tin lifted by 1.1%.
- The gold futures price fell by US$25.50 or 1.4% to U$1,763.90 an ounce.
- Spot gold was trading near US$1,771 an ounce at the US close.
- Iron ore lifted by US$3.25 or 3.4% to US$99.70 a tonne.
Australian markets
With the market set to rise this morning and interest diverted from the RBA’s movements, we turn our attention to some of the bigger moves to watch for on market.
One of the biggest things to look for is how Afterpay Ltd (ASX:APT) performs after Square inc (NYSE:SQ). shareholders agreed to the issuance of stock to Afterpay shareholders as part of the Australian company’s blockbuster merger with the US financial services and digital payments giant.
"As set out in the Scheme Implementation Deed, a condition precedent to the transaction between Square and Afterpay is the approval by Square stockholders of the issue of new Square shares in connection with the scheme. This condition is now satisfied," Afterpay said in a statement to the ASX.
The scheme booklet is expected to be issued on Friday, subject to court approval and registration with consumer watchdog ASIC, which is yet to approve the $39 billion deal.
This will be the largest corporate merger in Australian history should it go ahead, with the deal expected to be finalised in the first quarter of 2022.
"The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world," Afterpay co-founders Anthony Eisen and Nick Molnar said.
The pair will join Square once the deal is complete.
In other news, Fortescue Future Industries (FFI) is set to assist the Kingdom of Jordan to kick-start Jordan’s production of green hydrogen and ammonia.
FFI, Australian billionaire Andrew Forrest's green hydrogen development company, will partner with Jordan to conduct studies "with a view to developing green hydrogen production through potential large-scale wind and solar energy production facilities".
FFI will receive a minimum initial area of land for preliminary studies comprising 450 square kilometres for potential solar production, 1,000 square kilometres for potential wind energy production, and 1.5 square kilometres within an industrial zone for potential downstream production facilities.
Outcomes of the testing could lead to development and construction of a green hydrogen and/or green ammonia production facility on that land.
"The only way to stop global warming is through practical, implementable solutions and this partnership will play an important role in utilising the great potential for renewable energy in the Kingdom of Jordan," said Forrest.
Australian indices
- ASX 200 rose 0.93% to 7,392.70.
- ASX24 futures rose 0.5% to 7,400.
- S&P/ASX Small Ordinaries rose 0.83% to 3,540.30.
- All Ordinaries rose 0.87% to 7,713.00.
US markets
Stocks were higher yesterday, with major indices enjoying another round of closing records.
The market was higher after the Federal Reserve announced it would start to scale back its asset purchase program later this month.
This performance marked the fourth straight record for all three major US indexes, the longest such streak for the trio since a four-day run that ended October 5, 2017.
Joseph Palmer & Sons director Alex Moffat said, “The US Federal Reserve announced that it will begin taking its foot off the accelerator. Having had its foot flat to the floor since the 'wee virus' became a global problem in March last year. With its economy showing signs of life, it deems it is time to start easing off.
“The first move will be reducing the US$120 billion per month of asset purchases by US$15 billion, starting this month. The Fed reiterated its intention to leave the funds rate at 0% to 0.25% until 'inflation had hit 2% and was on track to moderately exceed 2% for some time', thus continuing the party line that the recent inflation spike is 'transitory'.
"The asset-buying program will be further reduced to US$90 billion during December. At the very least this will go some way towards reducing the staggering size of reverse repurchase agreements being dealt into the Fed twice a week.
“Happily, investors took the news in their stride since the expectation has been in markets for some time now, the Fed having telegraphed their intentions quite loudly for the past several months.”
Shares of Lyft jumped 8.2% on strong earnings, but Activision shares tumbled 14.1% after it delayed the launch of two games.
US indices
- Dow Jones was up 0.3% to 36,157.58.
- S&P 500 rose 0.7% to 4,660.57.
- Nasdaq rose 1% to 15,811.58.
European markets
Mixed markets again in Europe.
The UK FTSE index was the worst hit ahead of the Bank of England policy decision on Thursday. In London trade shares in Rio Tinto were broadly flat and BHP shares lifted by 0.8%.
In other news, Credit Suisse is changing the way it does things, with the investment bank to focus on more cuts to its scandalous prime brokerage business, which was at the centre of Archegos Capital Management scandal.
Volkswagen staff will enjoy further work-from-home flexibility: employees can now choose which four or five days a month they want to spend at the office.
Deutsche Lufthansa could purchase more Airbus A220 jets to boost profitability on regional routes. The move comes as European air travel recovers from the COVID-19 pandemic.
European indices
- STOXX 600 rose 0.35% to 481.22.
- German Dax was flat at 15,959.98.
- UK FTSE fell 0.4% to 7,248.89.