ASX makes bright start as tech stocks shine
By Jessica Yun
The ASX200 has opened 0.6 per cent higher on Monday off the back of a strong rally from Wall Street and a comeback from tech stocks.
Almost every sector was in the green on Monday morning, with the strongest gains in the tech sector (up 1.7 per cent) although energy stocks (down 0.5 per cent) were holding the bourse back. The positive start comes after the benchmark index posted its fourth week of gains last week.
Materials players Core Lithium and Lake Resources have raced out of the gates, up 7.5 per cent and 4.7 per cent as at 10.27am AEST, while Beach Energy and Bendigo and Adelaide Bank are the biggest losers so far, down 10.8 per cent and 5.2 per cent respectively on the back of their results.
Wall Street capped a choppy week of trading with a broad stock market rally Friday, as the S&P 500 notched its fourth consecutive weekly gain.
The benchmark index closed 1.7 per cent higher, for a 3.3 per cent weekly gain. The S&P 500 hadn’t posted such a good stretch since November.
The Dow Jones Industrial Average rose 1.3 per cent, while the Nasdaq and Russell 2000 index of smaller companies both closed 2.1 per cent higher. Each index also posted a solid weekly gain.
Technology stocks drove much the rally. Crude oil prices fell and bond yields were mixed.
“The data that we’ve gotten this week has all been consistent with the idea that we’re in the midst of peak inflation rates on a month-to-month basis,” said Scott Ladner, chief investment officer at Horizon Investments. “And that’s something that we’ve been waiting to see for months now. And it looks like, if that’s the case, then we’ve probably also seen peak Fed hawkishness.”
The S&P 500 rose 72.88 points to 4,280.15, while the Dow gained 424.38 points to 33,761.05. The Nasdaq added 267.27 points to 13,047.19.
Small-company stocks also made strong gains in a sign that investors are confident about the economy. The Russell 2000 rose 41.36 points to 2,016.62.
The central bank has been raising interest rates in the hopes of slowing the economy and cooling the hottest inflation in four decades, but investors are worried that it could hit the brakes too aggressively and steer the economy into a recession.
On Friday, a survey by the University of Michigan showed that consumer sentiment is stronger than economists expected. Still, inflation remains painfully high. That means the Fed is likely to remain on course with its rate hikes until it is certain that prices have peaked and are easing.
The Fed’s last two increases were by 0.75 percentage points. Traders now see about a 60 per cent chance that the central bank will raise overnight interest rates by half a percentage point at its next meeting.
The yield on the 10-year Treasury fell to 2.84 per cent from 2.88 per cent late on Thursday. It remains below the two-year yield. That’s an unusual inversion of the expectation that borrowing money for a longer period should cost more than a shorter period. When investors demand a higher return for a short term like the 2-year than a longer one like 10 years, it’s viewed by some investors as a reliable signal of a pending recession. The economy has already contracted for two consecutive quarters.
with AP
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