ASX set to jump despite unsteady Wall Street session

Stocks are wobbling in afternoon trading on Wall Street on Thursday as investors consider the outlook for rising interest rates and inflation.

The S&P 500 was moving between gains and losses throughout the morning and was up 0.1 per cent in early afternoon trade. The Dow Jones Industrial Average was down 108 points, or 0.3 per cent, to 36,297 and the Nasdaq rose 0.3 per cent. Despite the soft lead, the Australian sharemarket is set to surge, with futures at 5.36am AEDT pointing to a rise of 92 points, or 1.3 per cent, at the open.

Banks made some of the biggest gains as bond yields continued to rise a day after the Federal Reserve indicated it was ready to raise interest rates to fight off inflation. The yield on the 10-year Treasury rose to 1.73 per cent from 1.70 per cent late Wednesday. Citigroup gained 3 per cent. Higher bond yields allow banks to charge more lucrative interest on loans.

US crude oil prices rose 2.6 per cent and helped send energy stocks higher. ConocoPhillips rose 2.8 per cent.

A mix of retailers and health care stocks fell. Tesla fell 2.2 per cent and UnitedHealth Group fell 1.8 per cent

Several big technology stocks, which have an outsized influence on the S&P 500 because of their huge size, slipped. IBM was down 2.2 per cent.

Investors have been closely monitoring rising inflation’s impact on consumers and businesses. They have also been closely watching the Fed’s plans to dial back its ultra-low interest rate policies. Minutes from the central bank’s meeting in December showed that policymakers expressed concerns that inflation, which has surged to four-decade highs, was spreading into more areas of the economy and would last longer than they previously expected.

The central bank has already said it will accelerate the reduction of its bond purchases, which have helped keep interest rates low. Investors are watching for the impact from that pullback and gauging how quickly and how often the central bank will raise its benchmark interest rate.

Wall Street has also been weighing several economic reports this week.