ASX set to jump as Netflix, tech stocks drive Wall Street higher

By Stan Choe

US stocks are ticking higher, led by Netflix as customers keep signing up to watch its streaming service.

The S&P 500 was up 0.8 per cent in afternoon trading and on track to set a record for a fourth-straight day. The Dow Jones was up 0.3 per cent and the Nasdaq composite was 1.1 per cent higher. The Australian sharemarket is set to jump, with futures at 5am AEDT pointing to a rise of 48 points, or 0.6 per cent, at the open. The ASX edged up by 0.1 per cent on Wednesday.

Wall Street is on track for another record close.
Wall Street is on track for another record close.Credit: Bloomberg

They joined a worldwide lift for stocks after Chinese authorities announced measures to boost what’s been a disappointingly weak recovery for the world’s second-largest economy. Hong Kong’s Hang Seng index jumped 3.6 per cent to trim its loss for the month to date to less than 7 per cent.

On Wall Street, Netflix leaped 12.5 per cent after it said it added many more subscribers during the last three months of 2023 than analysts expected. That took precedence for investors over the company’s profit, which fell short of analysts’ forecasts.

Also helping to bolster tech stocks was ASML, the Dutch company that’s a major supplier to the semiconductor industry. It reported stronger profit and revenue than analysts expected, and its US-listed stock jumped 8.4 per cent.

Stocks have broadly rocketed to records recently on hopes that cooling inflation will convince the Federal Reserve to cut interest rates several times this year. Treasury yields have already come down considerably on such expectations, which can relax the pressure on the economy and financial system.

The only question on Wall Street is when the Fed would begin cutting rates and how deeply it would go. Traders have recently been trimming their bets following stronger-than-expected reports on the economy, which keep worries about a recession at bay but could also add upward pressure on inflation.

The latest signal of economic strength arrived Wednesday morning, when a preliminary report suggested growth in output for businesses accelerated to a seven-month high. Perhaps more importantly for Fed officials, the flash report from S&P Global also said that prices charged by businesses rose at the slowest rate since May 2020.

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The report did include some negative signals, such as delays in deliveries of supplies because of bad weather, “but for now the survey send a clear and welcome message of resilient economic growth and sharply waning inflation,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Treasury yields in the bond market pared earlier losses following the report. The yield on the 10-year Treasury slipped to 4.13 per cent from 4.14 per cent late Tuesday. The two-year Treasury yield, which moves more on expectations for the Fed, fell to 4.34 per cent from 4.38 per cent.

Economic reports coming later in the week could further sway expectations for rate cuts this year. On Thursday, the government will give its first estimate for how quickly the economy grew during the end of 2023. A day later, it will give the latest monthly update on the measure of inflation that the Federal Reserve prefers to use.

Virtually no one expects the Fed to cut rates at its meeting next week, but traders are still betting on a 45 per cent probability that it will move in March, according to data from CME Group.

Until then, earnings reports from companies are causing some of the biggest moves in the market.

Elevance Health climbed 3.5 per cent after it reported profit and revenue for the latest quarter that squeaked past analysts’ expectations. Kimberly-Clark fell 4.1 per cent after the maker of Huggies and Kleenex reported weaker profit and revenue than expected. DuPont tumbled 13.2 per cent after it gave forecasts for upcoming revenue and profit that fell well short of analysts’ estimates. It said it’s continuing to see weak demand from China, among other challenges.

China’s stock market has been one of the world’s worst recently on worries about its economy, which has raised pressure on Chinese authorities to make moves to stimulate the economy. Stocks climbed 1.8 per cent in Shanghai following China’s move to free up cash held by banks. They’re still down 5.2 per cent for the year so far.

Stocks also rose across much of Europe but dipped in Tokyo.

AP

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