Wall Street rebounds, ASX set to jump; Oil steadies
Stan Choe And Staff writers
Updated ,first published
The Australian share market is poised for a big bounce this morning, recovering from losses of more than $50 billion on Wednesday on concerns about the economic impact of the Iran war.
The expected rebound comes after Wall Street rebounded from two days of rough volatility as oil prices stalled and strong U.S. economic reports calmed war-shaken investors.
S&P/ASX 200 futures rose 95 points, or 1.1 per cent, to 8953; This points to strong gains when the local market opens. Earnings could claw back some of Wednesday’s losses, when the ASX fell 1.9 per cent. The Australian dollar was trading at 70.75¢ at 9.03am AEDT.
Australia will publish January trade balance figures this morning. On the corporate side, Federal Court Judge Lee will rule on ASIC’s landmark civil case against an entire board of former Star entertainment directors in 2022.
Overnight on Wall Street, the S&P 500 rose 0.8 percent, clawing back most of its losses since the start of the war with Iran. The Dow Jones Industrial Average rose 238 points, or 0.5 percent, while the Nasdaq composite rose 1.3 percent.
The force is off to a frightening start to Wednesday, when South Korea’s Kospi stock index fell 12.1 percent, its worst loss in history. While uncertainty about the war and its economic consequences has caused prices to fluctuate in financial markets this week, many are taking their cues from the course of oil prices.
Oil prices moderated as trade shifted westward, from Asia to Europe and the Atlantic. The barrel price of Brent crude oil, the international standard, briefly exceeded $84, then settled at $81.40 and returned to the level of the day before. The benchmark US crude oil rose 0.1 percent to 74.66 dollars a barrel.
Rising hopes for the US economy also supported stocks.
Growth of U.S. businesses in real estate, finance and other service sectors rose last month at the fastest pace since summer 2022, a report said. Encouragingly from an inflation perspective, prices for such businesses were also increasing at a slower rate, at least before the war with Iran began.
A second report suggested that nongovernmental U.S. employers began hiring last month. That could be a hopeful signal for the U.S. government’s more comprehensive report on the strength of the labor market on Friday.
Concerns are intensifying in financial markets about how long the war with Iran will last, how much inflation will rise due to the high price of oil, and how much damage this will damage company profits.
The US stock market has a history of recovering relatively quickly from military conflicts in the Middle East, but this comes with a warning that oil prices will not rise too high. This suggests that some professional investors should be patient with fluctuations, at least when it comes to financial markets.
Not everyone is optimistic.
“I think the situation in Iran is out of control, and I think US President Donald Trump has made a huge miscalculation,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very dire.”
Several companies on Wall Street helped drive Wednesday’s rally.
Stocks in the crypto industry rose as Bitcoin price rose above $73,000. Coinbase Global increased 14.6 percent and Robinhood Markets increased 8.1 percent.
Retailers and travel companies have rallied on hopes that a solid economy and easing increases in gas prices will mean their customers will be able to spend more.
Ross Stores rose 8 percent after reporting better profits and revenue than analysts expected in the latest quarter and saying it would enter 2026 with “solid momentum.” Expedia Group rose 3.1 percent.
Meanwhile, Big Tech stocks were the strongest force pushing the market up. Amazon increased by 3.9 percent and Nvidia increased by 1.7 percent. Because they are among the largest stocks in the U.S. market in terms of total value, their movements carry more weight in the S&P 500.
In other international markets, indices rose in Europe following the sharp declines in Asia. France’s CAC 40 index rose 0.8 percent and Germany’s DAX index rose 1.7 percent. This follows losses of 2 percent for Hong Kong’s Hang Seng and 3.6 percent for Japan’s Nikkei 225, as well as Seoul’s historic decline.
In the bond market, Treasury yields have remained relatively stable after rising earlier in the week on worsening inflation concerns. The yield on the 10-year Treasury note rose to 4.09 percent from 4.06 percent on Tuesday.
Wednesday’s strong reports on the economy were welcome news for the Federal Reserve, whose job it is to keep the U.S. job market healthy and inflation low. The Fed’s job has become even more difficult due to the increase in oil prices, which pushes already high inflation upwards.
The Fed may keep interest rates high to keep inflation under control. But higher interest rates will also make borrowing costs more expensive for U.S. households and companies, negatively impacting the economy.
The central bank has previously said it plans to continue interest rate cuts later this year in the hope of providing support to the job market and economy. Due to the war and high oil prices, traders postponed their predictions that the Fed might start cutting interest rates again until the summer.
with AP
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