ASX jumps in early trade after Wall Street rallies

By Sumeyya Ilanbey
Updated

The Australian sharemarket leaped higher at the open, tracking gains on Wall Street where tech stocks soared overnight as a fall in bond yields helped lift megacap stocks.

The S&P/ASX200 rose 78.5 points, or 1.05 per cent, to 7530 at 10.15am on Tuesday led by the local tech sector, which climbed 2.1 per cent. Energy was the weakest sector, trading virtually unchanged despite the market rally after crude prices slumped overnight.

Strong gains on Wall Street are boosting the local sharemarket.
Strong gains on Wall Street are boosting the local sharemarket.Credit: Reuters

Resmed recorded the largest gains among the mega-cap stocks after its shares lifted 3.4 per cent, followed by Wisetech, Seek and Pilbara Minerals (all up 2.4 per cent). Large-cap tech stocks Xero (up 1.7 per cent), NEXTDC (1.9 per cent) and Altium (up 1.6 per cent) also lifted.

On the flipside, Infratil led the large-cap decliners, its shares falling 0.8 per cent, followed by Viva Energy Group and Suncorp (both down 0.3 per cent).

Oil giant Woodside dragged down the energy sector after its shares slipped 0.2 per cent, following a slump in the oil price overnight following sharp price cuts by top exporter Saudi Arabia. Brent crude dropped 3.4 per cent to $US76.12 a barrel.

The Australian dollar traded unchanged at 67.16 US cents. The November retail trade and building approval reports will be released at 11.30am AEDT.

The gains on the ASX come after the US market rallied overnight in New York. The S&P 500 closed 1.4 per cent higher at 4763.54 and the Nasdaq Composite rallied 2.2 per cent, while the Dow Jones Industrial Average added 0.6 per cent, held back by a slump in Boeing shares.

US megacaps such as Amazon and Google’s parent company Alphabet gained more than 2.3 per cent as Treasury yields fell ahead of readings on inflation and a new supply of US government debt this week, with the benchmark 10-year US Treasury yield hitting a low of 3.966 per cent on the session.

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“This is definitely a yield-driven market for now and investors are trying to discount when and how many rate cuts we will see, the timing and the magnitude of rate cuts,” said Bill Merz, head of capital markets research at US Bank Wealth Management in Minneapolis.

“Now we’re probably in a more rational place in terms of yields, and it’s a question of, is the market getting that right and are yields falling for the right reasons or the wrong reasons? And investors have so far taken the view that yields are falling for all the right reasons, that the Fed is navigating what thus far has been a soft landing.”

Apple gained 2.4 per cent after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from February 2 in the United States.

Chipmakers Nvidia and Advanced Micro Devices surged more than 5.5 per cent each. The Philadelphia SE Semiconductor Index was up 3.3 per cent after dropping 5.8 per cent last week, its biggest weekly percentage fall since October 2022.

Meanwhile, Boeing plunged 8 per cent after the plane maker and US regulators gave the go-ahead on Monday for airlines to inspect jets that were grounded after a panel blew off an Alaska Airlines-operated 737 MAX 9 in mid-flight that forced a dramatic landing of the airliner over the weekend.

The S&P 500 energy index led declines among the 11 S&P 500 sectors, and was last down 1.2 per cent after hitting its lowest level in a month.

On Friday, the benchmark S&P 500 snapped a nine-week streak of gains, as investors dialled back expectations on how aggressive the Federal Reserve would be in cutting interest rates this year following a mixed bag of economic data.

Atlanta Fed President Raphael Bostic said on Monday that the central bank’s dual goals of lowering inflation and maintaining low unemployment are not yet in conflict.

Money markets now see a 69.5 per cent chance of at least a 25-basis-point rate cut as soon as March, according to CME’s FedWatch Tool, down from 88.5 per cent a week ago.

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Source: Thanks smh.com