ASX set to gain as Wall Street drifts near record high
Stan Choe
The Australian stock market will open higher, with futures pointing to a slight rise of 29 points, or 0.34 percent, at the open. The rise comes after the ASX extended losses on Tuesday after the Reserve Bank kept interest rates steady and hinted at possible interest rate hikes next year.
The Australian dollar is fetching 66.35 US cents at 5.20am AEDT.
U.S. stocks fell on Tuesday as Wall Street waited to see what the Fed would say about where interest rates would go on Wednesday.
The S&P 500 rose 0.1 percent for its second loss in the last 11 days, approaching its all-time high in October. The Dow Jones Industrial Average was down 89 points, or 0.2 percent, in afternoon U.S. Eastern time and the Nasdaq composite was up 0.2 percent.
Exxon Mobil was one of the strongest forces that lifted the market. It rose 2.5 percent after it raised its profit forecast for the next five years, thanks in part to the strength of its fields in the Permian basin in the United States and off the coast of Guyana.
CVS Health rose 2.8 percent after announcing new financial forecasts, including expectations of “mid-teens” compound annual growth in earnings per share over the next three years.
Stating that CVS Health closed 2025 with strong momentum, Chief Financial Officer Brian Newman said, “We are determined to do what we say.”
They helped counter a 1 percent decline for homebuilder Toll Brothers and an 8.1 percent decline for AutoZone; Both reported weaker results than analysts expected in the latest quarter.
Toll Brothers CEO Douglas Yearley said demand for new homes remained weak in many markets. But he noted how his company’s luxury homes are more focused on affluent clients who may be less harmed by “affordability pressures” than other potential home buyers.
One of the biggest factors in this affordability issue is mortgage rates. They are cheaper than at the beginning of the year, but they revived a little after October. This is largely due to questions in the bond market about how much further the Fed will cut its key interest rate.
The widespread expectation is that the Fed will cut interest rates on Wednesday afternoon, which will be its third easing of the year. Low interest rates can stimulate the economy and investment prices, but the downside is that they can worsen inflation.
The U.S. stock market is on the brink of record highs, in part because of the near-presumption that the Fed will cut interest rates again on Wednesday.
The big question is what the Fed will say about where interest rates will go next. Many on Wall Street are bracing for speeches aimed at dampening expectations for further cuts in 2026.
Inflation has remained stubbornly above the Fed’s 2 percent target, and Fed officials are clearly divided in their views on whether higher inflation or a slowing job market is the greater threat to the economy.
Treasury yields rose in the bond market after a report released Tuesday showed U.S. employers posted 7.7 million jobs at the end of October. This is a slight increase from the previous month and the highest level since May.
If the job market doesn’t worsen, the Fed may not need to cut further rates.
Following the release of the job opportunities report, the 10-year Treasury yield erased the previous decline and stood at 4.17 percent late Monday.
The yield on the two-year Treasury note, which moves closer to expectations of what the Fed will do, rose to 3.60 percent from 3.57 percent late Monday.
Elsewhere on Wall Street, the market’s most influential stock, Nvidia, fell 0.3 percent after President Donald Trump allowed it to sell an advanced chip used in artificial intelligence technology to “approved customers” in China. The H200 isn’t Nvidia’s best product.
Indices in stock markets abroad were mixed across Europe and low in most of Asia.
Indices fell 1.3 percent in Hong Kong and 0.7 percent in Paris due to the world’s two biggest moves.
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