Australian shares are set to climb today after a positive day on Wall Street and European indices have jumped after the British Prime Minister’s resignation.
Key points:
- The ASX is set to extend its gains on Friday
- The Australian dollar gained almost 1 per cent to 68.39 US cents.
- Iron ore rose $US1.85 on Thursday or 1.6 per cent to $US114.18 a tonne.
ASX SPI 200 futures were up 0.8 per cent to 6,605 by 6:45am AEST.
The Australian dollar gained almost 1 per cent to 68.39 US cents.
The Wall Street benchmarks ended up on Thursday, with the S&P 500 and Nasdaq recording their fourth-successive higher closes, as traders leaned in to US equities after the Federal Reserve hinted at a more tempered program of interest rate hikes.
The benchmark S&P 500 index has closed higher in all four sessions this month after recording its steepest first-half percentage drop since 1970.
Investors were digesting minutes from the US Federal Reserve’s June policy meeting, which acknowledged the risk of rate increases having a larger-than-anticipated effect on economic growth.
The minutes also said an increase of 50 or 75 basis points would likely be appropriate at the policy meeting in July.
The less hawkish tone came after fears aggressive rate hikes could trigger a recession.
Tech heavyweights rose, with Tesla up 5.5 per cent, Google parent Alphabet adding 3.7 per cent, and Affirm Holdings and Avalara gaining, respectively, 17.1 per cent and 16.4 per cent.
“It’s starting to feel like real money is starting to come back,” Louis Ricci, head trader at Emles Advisors, said.
“There’s no reason that the market cannot go down another 30 per cent, but we think the risk is 30 per cent to the downside but three to four times that to the upside.”
Meanwhile, a report on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly rose last week and demand for labour was slowing, with lay-offs surging to a 16-month high in June.
The Dow Jones Industrial Average rose 346.87 points, or 1.1 per cent, to 31,384.55.
The S&P 500 gained 57.54 points, or 1.5 per cent, to 3,902.62, while the Nasdaq Composite added 259.49 points, or 2.2 per cent, to 11,621.35.
Almost all of the S&P sectors were higher. Energy was the biggest winner, up 3.5 per cent as oil and gas companies followed the rebound in crude prices from the previous day’s 12-week low.
The Philadelphia SE Semiconductor index climbed 4.5 per cent after South Korea’s Samsung Electronics turned in its best second-quarter profit since 2018, driven by strong sales of memory chips.
In Europe, investors reacted to news of Boris Johnson resigning as UK Prime Minister. Some may be hoping his departure will mean a better relationship with Europe.
The pan-European STOXX 600 index gained 1.9 per cent, Germany’s DAX rose 2 per cent and Britain’s FTSE added 1.1 per cent.
Oil markets jumped as tight supply outweighed recession fears.
Brent crude was up 3.4 per cent and worth $US104.10 per barrel, while West Texas crude rose 3.7 per cent to $US102.24 per barrel.
The iron ore futures price rose by $US1.85 on Thursday, or 1.6 per cent, to $US114.18 a tonne.
Spot gold was up 0.1 per cent and selling for $US1,739.20.