ASX set for positive open despite Wall Street sliding lower

Wall Street stocks fell in afternoon trading on Monday (US time), adding to the declines that started last week as investors continue to be concerned about rising interest rates and the potential for inflation down the road.

In early afternoon trade, the S&P 500 was down 0.2 per cent pulled down by technology and health care companies which have done well over the past year. The Dow Jones has risen 0.4 per cent while the technology-heavy Nasdaq has fallen 1.4 per cent.

Wall Street’s losing run looks set to continue.
Wall Street’s losing run looks set to continue.Credit:NYSE

Despite the soft lead the Australian sharemarket is set for gains, with futures at 5.12am AEDT pointing to a rise of 14 points or 0.2 per cent at the open.

Investors remain focused on the future of global economies badly hit by COVID-19 and the potential for more stimulus to fix them. The US House of Representatives is likely to vote on Biden’s proposed stimulus package by the end of the week. It would include $US1400 ($1767) cheques to most Americans, additional payments for children, and billions of dollars in aid to state and local governments as well as additional aid to businesses impacted by the pandemic.


But the large amount of stimulus being pumped into the economy has given some investors pause as worries of inflation have re-entered the market after being non-existent for more than a decade. Yields on US Treasury bonds and notes have risen in the last several weeks as investors have predicted more inflation would come with the economic recovery.

“There are some risks out there,” said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. “The issue is are we just normalising back to where we were before the pandemic or are we talking about a sea change.”

The yield on the 10-year Treasury rose to 1.35 per cent from 1.34 per cent late on Friday and has been rising steadily throughout the year. The higher yields have helped lift banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America rose 1.7 per cent.

There was a lot of churn within different sectors just behind the broader market losses. The S&P 500 was just about evenly split between winners and losers.

Energy companies made solid gains as crude oil prices rose more than 3 per cent. Exxon Mobil gained 4.4 per cent and Chevron rose 3.6 per cent.

Airlines, which have been battered by the virus pandemic, rose after Deutsche Bank upgraded its view on the sector and the potential for recovery as COVID-19 cases fall and vaccination rates increase. American Airlines jumped 11.5 per cent, while both Delta and United Airlines rose more than 6 per cent.


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