ASX set to open slightly up, as Wall Street eyes Jackson Hole rates guidance

The Australian share market is expected to edge higher when trading begins after Wall Street indices rose on positive economic data as investors await guidance on interest rate hikes from the US central bank.

ASX SPI 200 futures were up by 0.1 per cent to 6,980, by 6:55am AEST.

The Australian dollar rose 1 per cent to 69.77 US cents.

On Thursday, the ASX 200 index lifted 0.7 per cent, to close at 7,048 points as some of the nation’s biggest companies reported better-than-expected profit results.

On Wall Street, the Dow rose 1 per cent, to 33,291. The S&P 500 jumped 1.4 per cent to 4,199, and the Nasdaq Composite gained 1.6 per cent to 12,639.

Investors are awaiting new details of rate hikes from Federal Reserve Chairman Jerome Powell’s speech on Friday morning (US time) at the annual Jackson Hole, Wyoming, symposium.

Mr Powell is expected to reiterate the US central bank’s position on putting a lid on infiltration by aggressively hiking rates.

It’s also expected the Fed Reserve will be slow to cut interest rates.

“We’re in a period of time between the end of the second-quarter earnings season and meaningful additional data from the Federal Reserve,” Bill Northey, senior investment director at US Bank Wealth Management said.

“Markets are churning a bit with a reasonably low level of volatility.”

The fed funds rate is now in a range of 2.25 per cent to 2.5 per cent. The terminal rate of 3.50 per cent to 3.75 per cent is expected by the first quarter of next year.

The yield on the closely watched 10-year US Treasury note faded after recently hitting a two-month high.

Declining interest rates tend to benefit technology stocks trading at high valuations.

“Lower interest rates have certainly put some support underneath some of the more growth-oriented sectors,” Mr Northey said.

Nvidia jumped 4 per cent after the graphics chipmaker gave a weaker-than-expected quarterly forecast that many investors viewed as signalling the worst of a sales downturn may be over. 

Apple and Microsoft rose more than 1 per cent, while Amazon and Google-owner Alphabet added more than 2 per cent, with all four companies making substantial contributions to the Nasdaq’s increase.

All 11 S&P 500 sector indexes rose, led by materials up 2.2 per cent, followed by a 2 per cent gain in communication services.

Data earlier in the day showed the US economy contracted less than initially thought in the second quarter, dispelling some fears that a recession was underway.

Oil prices slid in choppy trade as investors eyed potential sanctions on Iranian oil exports and the threat of weaker demand due to rising interest rates.

Brent crude fell 1.5 per cent to $US99.75 a barrel.

Spot gold was half a per cent higher at $US1,770.90 an ounce.

Iron ore futures fell by 19 cents or 0.2 per cent to $US104.96 a tonne.

In Europe, the pan-European STOXX 600 index gained 0.3 per cent, Germany’s DAX added 0.4 per cent and Britain’s FTSE rose 0.1 per cent.

ABC/Reuters

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