ASX set to rise as Wall Street grinds higher

By Stan Choe

Wall Street drifted higher through a quiet session as the bond market calmed down following some sharp swings.

The S&P 500 rose 0.2 per cent and nearly returned to its all-time high set at the end of last week. The Dow Jones gained 0.4 per cent and the Nasdaq composite edged up by 0.1 per cent, to 15,609.00.

Wall Street has had a mixed session.
Wall Street has had a mixed session. Credit: AP

The Australian sharemarket is set for a strong start to the session, with futures at 7.59am AEDT pointing to a rise of 55 points, or 0.7 per cent, at the open. The ASX slipped by 0.6 per cent on Tuesday.

Stocks have been under some pressure recently as hints keep coming that the Federal Reserve likely won’t deliver cuts to interest rates as soon as traders had hoped. The economy has remained remarkably solid, even though the Fed has jacked up rates to slow it and inflation down. That has pushed some forecasts for the first easing of rates from March into the summer.

If easier interest rates in the short term won’t boost stock prices, the hope is that strong profits by companies will.

GE Healthcare Technologies was the day’s best performer in the S&P 500 and jumped 11.6 per cent after reporting healthier profit and revenue for the latest quarter than analysts expected.

Palantir Technologies, one of the companies that’s been riding a frenzy on Wall Street around artificial intelligence technology, soared 30.8 per cent after its results for the latest quarter roughly matched analysts’ expectations. The data analytics company brought in slightly more revenue than analysts expected, and its CEO said it’s seeing surging demand across industries for AI platforms.

Streaming music and podcast platform Spotify climbed 3.9 per cent after it reported stronger-than-expected growth in its subscriber base, even as revenue missed analysts’ targets.


Those gains helped to offset an 11.5 per cent tumble for FMC, whose products help protect crops. The company’s profit and revenue fell short of analysts’ projections, in part because of drought conditions in Brazil.

Fiserv was another laggard. The payments and financial technology company fell 2.1 per cent after its revenue for the latest quarter fell just short of analysts’ expectations. Its profit nevertheless topped forecasts.

With earnings season at about the midway point for the big companies in the S&P 500 index, there are still plenty of heavyweights reporting this week including CVS Health, The Walt Disney Co. and PepsiCo.

In the bond market, the yield on the 10-year Treasury relaxed following its slingshot ride higher in recent days. It eased to 4.09 per cent from 4.17 per cent late Monday.

Strong reports on the job market, services industries and other areas of the U.S. economy have pushed yields much higher, up from 3.88 per cent less than a week ago. Traders are now betting on less than a 20 per cent probability that the Federal Reserve will begin lowering rates in March, down from 68 per cent a month ago, according to data from CME Group.

While a delay in rate cuts hurts the stock market, particularly after very high expectations for cuts helped drive a lengthy rally, the strong economic data also carry an upside for investors. They should mean stronger profits for companies.

Consider Wall Street’s reaction to Friday’s report that showed employers hired many more workers last month than expected. Investments tied to the S&P 500 initially fell after the release of the blowout data, but the index climbed through the day to set another all-time high.

That may indicate the market “is warming up to the idea that ‘good is, in fact, good,’” when it comes to data on the economy “and perhaps less reliant on rate cuts,” according to UBS strategists led by Maxwell Grinacoff. But they acknowledge that stocks seen as lower quality are not seeing as big a benefit.

In stock markets abroad, Chinese indexes soared following the latest measures announced to help prop up what have been some of the world’s worst-performing markets. Investors are hoping for even more action from the government.

Stocks leaped 4 per cent in Hong Kong and 3.2 per cent in Shanghai, though both markets are still down by more than 5 per cent for the young year so far. Worries about a weak economic recovery and troubles in the real-estate industry have dragged on Chinese stocks.

Stocks were mixed and moved more modestly elsewhere in Asia and in Europe.

In London, the FTSE 100 rose 0.9 per cent after shares of energy giant BP jumped following its latest earnings report.


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