ASX Set to Open Slightly as Wall Street Eyes Jackson Hole Rate Guidance

The Australian stock market is expected to rise when trading begins after Wall Street indices rose on positive economic data as investors await guidance on interest rate hikes from the US central bank.

ASX SPI 200 futures were up 0.1 percent at 6,980 by 6:55 a.m. AEST.

The Australian dollar rose 1 percent to 69.77 cents on the dollar.

On Thursday, the ASX 200 index rose 0.7 percent to close at 7,048 points, as some of the country’s largest companies reported better-than-expected earnings.

On Wall Street, the Dow rose 1 percent to 33,291. The S&P 500 jumped 1.4 percent to 4,199, and the Nasdaq Composite gained 1.6 percent to 12,639.

Investors are awaiting further details on rate hikes from Federal Reserve Chairman Jerome Powell’s speech on Friday morning (US time) at the annual symposium in Jackson Hole, Wyoming.

Powell is expected to reiterate the US central bank’s position to cap infiltration by aggressively raising rates.

The Federal Reserve is also expected to be slow to cut interest rates.

“We are in a window of time between the end of the second-quarter earnings season and significant additional data from the Federal Reserve,” said Bill Northey, senior chief investment officer at US Bank Wealth Management.

“Markets are chopping up a bit with a reasonably low level of volatility.”

The fed funds rate is now in a range of 2.25 percent to 2.5 percent. The terminal rate of 3.50 percent to 3.75 percent is expected in the first quarter of next year.

The yield on the closely watched 10-year US Treasury note faded after recently hitting a two-month high.

Lower interest rates tend to benefit technology stocks trading at high valuations.

“Lower interest rates have certainly put some support under some of the more growth-oriented sectors,” Northey said.

Nvidia rose 4 percent after the graphics chip maker gave a weaker-than-expected quarterly forecast that many investors saw as a sign the worst of a sales slump may be over.

Apple and Microsoft rose more than 1 percent, while Amazon and Google-owner Alphabet added more than 2 percent, with all four companies making substantial contributions to the Nasdaq’s rise.

All 11 S&P 500 sector indices rose, led by materials with a 2.2 percent gain, followed by a 2 percent rise in communication services.

Data earlier in the day showed the US economy contracted less than initially thought in the second quarter, allaying some fears that a recession was brewing.

Oil prices fell in choppy trading as investors eyed possible sanctions on Iranian oil exports and the threat of weaker demand due to rising interest rates.

Brent crude fell 1.5 percent to $99.75 a barrel.

Spot gold rose half a percentage point to $1,770.90 an ounce.

Iron ore futures fell 19 cents, or 0.2 percent, to $104.96 a tonne.

In Europe, the pan-European STOXX 600 index gained 0.3 percent, Germany’s DAX added 0.4 percent and Britain’s FTSE rose 0.1 percent.


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