ASX set to jump on RBA day, Wall Street rises as oil prices tumble

The US stock market is rising and recovering some of last week’s sell-off that was led by the tech and AI industries.

The S&P 500 climbed 0.6 per cent, coming off its third straight losing week, and pulled within 2.5 per cent of its all-time high. The Dow Jones Industrial Average was up 539 points, or 1 per cent, in midday trade, and the Nasdaq composite was 0.7 per cent higher.

The Australian sharemarket is set to jump, with futures pointing to a rise of 70 points, or 0.8 per cent, at the open. The ASX fell 0.6 per cent on Monday. The Australian dollar was trading at US70.11¢ at 5.18am AEDT. The Reserve Bank announces its interest rates decision at 2.30pm AEDT, with a rise tipped.

Stocks got a lift from sharp drops for oil prices, which headed back down in their latest yo-yo move on uncertainty about when the war with Iran will allow the global industry to return to normal. The price for a barrel of Brent crude, the international standard, fell 7.4 per cent to $US105.03.

The price for the most actively traded contract in the Brent market has been veering between roughly $US70 and $US120 per barrel since just before the war began, and it’s been quick to reverse direction.

So have stocks in the artificial-intelligence industry, which have been shaky for months amid criticism that they surged too high and are in a bubble. Worries are growing that all the hundreds of billions of dollars Big Tech companies are pouring into AI data centres won’t yield enough productivity and profit to make the investments worth it.

The latest profit reports from Alphabet and other Big Tech companies also showed how AI may be dragging on their own businesses. Not only did Google’s parent company burn through more cash during the latest quarter, as measured by something called free cash flow, it also reported slower-than-expected growth in its search business, which raised worries about AI cannibalising its cash cow.

But Alphabet rose 1.3 per cent Monday, recovering some of its drop of more than 12 per cent from Thursday, which was its worst in history.

Other tech giants also held steadier. Nvidia rose 1.1 per cent following its 4.2 per cent slide on Friday.

Outside of AI and tech, several stocks climbed after reporting better profits for the summer than analysts expected.

Marriott International rallied 4.7 per cent after reporting strength for its hotels around the world. Even in the Middle East, where the war has affected its business, CEO Anthony Capuano said that “trends improved meaningfully” from the spring.

Idexx Laboratories leaped 19.4 per cent after likewise delivering stronger profit and revenue for the latest quarter than analysts expected. The company, which sells diagnostic equipment and other products to veterinarians, also raised its forecasts for revenue and profit for the full year of 2026.

Expectations are high for all kinds of companies to continue to deliver big gains in profits as the U.S. economy keeps chugging along, even with high inflation and interest rates. A report on Monday said that growth for U.S. manufacturing was better last month than economists expected. Perhaps just as importantly, a measure of inflation in the survey by the Institute for Supply Management showed prices were rising at a slower pace.

Monday’s drop in oil prices, meanwhile, helped launch stocks of companies with big fuel bills. United Airlines flew 6.5 per cent higher, Southwest Airlines climbed 4.4 per cent and cruise operator Carnival rose 5.5 per cent.

They helped offset a 7.3 per cent drop for Marvell Technology after it announced a deal to buy Lumentum, which sells lasers and other products that power the networks and infrastructure behind AI and cloud computing.

Marvell said it will give 4.5 of its shares for each Lumentum share, valuing it at roughly $US115 billion ($164 billion). Lumentum’s shares dropped 12.8 per cent.

Apple was the single heaviest weight on the market and fell 1.5 per cent ahead of its profit report, which is scheduled to arrive after trading ends for the day.

In stock markets abroad, indexes rose in Europe. The swings were larger in Asia, where South Korea’s Kospi jumped 2.2 per cent on renewed strength for the tech giants that dominate its market.

In China, indexes rose 1.1 per cent in Shanghai and 0.4 per cent in Hong Kong to recover some of their steep recent losses. Stocks in Shanghai finished October more than 15 per cent below a peak reached in May.

The People’s Bank of China said Monday that around 100 billion yuan ($21.4 billion) would be deployed under a new program could help support the market.

AP

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