ASX set for gains as Wall Street hovers around record highs

Stocks edged higher in afternoon trading as investors continue to balance hope for additional aid from Washington with a spike in virus cases that continues holding back a broad economic recovery.

The S&P 500 is 0.1 per cent higher in early afternoon trade on Wednesday (US time) and is hovering around its record high after a broad rally on Tuesday broke a four-day losing streak. Those gains pushed the tech-heavy Nasdaq to a record high.

Wall Street is having a mixed session on Wednesday.
Wall Street is having a mixed session on Wednesday.Credit:AP

The Dow Jones Industrial Average has fallen by 0.2 per cent while the tech-heavy Nasdaq has risen by 0.4 per cent. At 5.07am AEDT, futures are pointing to a gain of 22 points, or 0.3 per cent, at the open for the ASX.

Smaller stocks slipped. The Russell 2000 index fell 0.3 per cent and slightly backed off the record high it set a day earlier.


Top congressional leaders are nearing agreement on a long-delayed COVID-19 relief package and a deal could be sealed as early as Wednesday. Investors have been hoping that Democrats and Republicans might be able to move past their partisan bickering to give businesses and people another financial lifeline.

At the same time, more evidence emerged that the economic recovery is stalling. The Commerce Department reported Wednesday that retail sales fell 1.1 per cent in November. The slump in spending comes amid rising unemployment as virus cases again surge and prompt tighter restrictions on businesses and people.

Wall Street has also been looking further ahead with optimism as vaccines for the virus start rolling out. So far, Pfizer and partner BioNTech’s coronavirus shots have gained emergency approval and are already being given to key health care workers. The Food and Drug Administration has given another vaccine, developed by Moderna, a positive analysis and could it be on a path to approval this week.

Distribution of vaccines to the wider population will likely take months, but more vaccines on the market will speed up the process and put the economy on a path to normalcy sooner.

“If markets can continue to look forward, that clearly bodes well,” said Jeff Buchbinder, equity strategist at LPL Financial. “The combination of stimulus and signs that the latest wave of COVID-19 has started to peter out, those are clear positives.”

While the long-term view for the economy and markets remains positive, investors are likely in for more volatility in the coming months.

“We could be in for a choppy January and February until we can get more people inoculated and really put this pandemic to bed,” Buchbinder said.

Treasury yields rose in a sign that investors were becoming a bit more optimistic about the economy. The yield on the 10-year Treasury rose to 0.92 per cent from 0.91 per cent late Tuesday.

Technology stocks, which have given much of the weight to the markets gains over the last few months, were the biggest gainers Wednesday. Microsoft rose 2.2 per cent and Adobe rose 1.4 per cent.

Elsewhere, the market was churning. Companies that would benefit from a broader reopening of the economy were mixed, while industrial stocks were mostly lower.

Bitcoin, the world’s largest cryptocurrency, topped $US20,000 for the first time.

Investors also have been encouraged by signs that the European Union and United Kingdom may finally broker a trade deal following the UK’s departure from the bloc. Germany’s DAX rose 1.5 per cent and France’s CAC 40 gained 0.3 per cent. The FTSE 100 in London rose 0.9 per cent

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