ASX eyes gains after Wall Street rises; Oil market in focus

The Australian sharemarket is set for gains after a positive session on Wall Street, while eyes will be on oil markets this morning after developments over the weekend.

The S&P 500 climbed 0.6 per cent for its first gain since setting its all-time high three days earlier. The Dow Jones Industrial Average added 423 points, or 0.8 per cent, and the Nasdaq composite rose 0.6 per cent.

The Australian sharemarket is set to 37 points, or 0.4 per cent, at the open. Investors will also have to digest developments in the oil market, after Donald Trump struck a controversial deal with Russia on Moscow’s exports of diesel. The Australian dollar was trading at US69.78¢.

Trump announced on Sunday (US time) that Russia and Ukraine have agreed to an “energy ceasefire” effective immediately. “Both parties have agreed. Do not break it!” he wrote on his Truth Social platform. He didn’t provide further details.

Treasury yields flipped up and down in the bond market following their own sharp moves earlier in the week. The yield on the 10-year Treasury eventually climbed to 5.24 per cent from 5.22 per cent late Thursday.

It recently touched its highest level since 2002 because of worries about high inflation, the US government’s massive debt load, signals that the US economy is continuing to grow and other factors. High yields threaten to slow the economy by making borrowing money more expensive for everyone, and the average 30-year fixed-rate mortgage has already leaped to its highest level in nearly three years.

Yields are also shooting higher in other bond markets around the world, which makes investors less willing to pay high prices for stocks and other investments. But the high yields have attracted investors to recent auctions of Treasurys, and that demand is helping to limit further increases for yields.

On Wall Street, Humana rallied 11.6 per cent and helped lift the US stock market despite the swings in the oil and bond markets. The insurer said it received encouraging data about its quality ratings versus its competitors for Medicare Advantage plans.

Companies that own cell towers were also at the front of the market, including leaps of 15.6 per cent for Crown Castle and 9.3 per cent for American Tower.

They rallied after SpaceX announced a purchase that could help it become a major mobile carrier in the United States. It still needs to get approval from US regulators, but SpaceX said the purchase of low-band spectrum would allow its Starlink Mobile business to have a signal that can penetrate walls and connect customers inside buildings who may not be able to access its satellites. SpaceX’s stock added 1.2 per cent.

The threat of another big competitor sent stocks lower across the wireless industry, including drops of 13.3 per cent for T-Mobile US, 9.8 per cent for AT&T and 8.7 per cent for Verizon.

Delta Air Lines erased an early loss and eked out a tiny gain of less than 0.1 per cent after reporting profit and revenue for the summer that was slightly weaker than analysts expected. CEO Ed Bastian said demand remains strong and customers want to fly, but the airline is also having to absorb a $6 billion increase in fuel costs this year.

The pressure is on companies broadly to deliver strong growth in profits after their stock prices ran toward records despite the downward push from high bond yields. Next week will bring high-profile profit reports from the country’s biggest banks, including Citigroup, JPMorgan Chase and Wells Fargo all on Tuesday.

Expectations are high for corporate profits, even as Americans say they’re feeling more squeezed by high inflation. A preliminary report from the University of Michigan said Friday that US consumers are raising their own forecasts for how bad inflation will be over the coming year.

They’re expecting inflation of 4.7 per cent, up from their forecast of 4.6 per cent a month ago and just 3.4 per cent in February before the war with Iran began. Sentiment among consumers is falling sharply for Americans with lower incomes and smaller investments in stocks, who can least afford the fast increases in the cost of living.

All told, the S&P 500 rose 46.18 points to 7,811.54. The Dow Jones Industrial Average climbed 423.31 to 51,654.95, and the Nasdaq composite gained 172.83 to 27,366.17.

In stock markets abroad, indexes rallied in Europe with gains of at least 1 per cent in France, Germany and the United Kingdom.

Asian markets were more mixed. Japan’s Nikkei 225 finished nearly unchanged, while Hong Kong’s Hang Seng jumped 1.8 per cent.

AP

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