The Australian sharemarket is set for a strong start after US stocks hit fresh all-time highs as investors looked to company earnings for further vindication of their bets on a soft landing for the world’s largest economy.
ASX futures rose 37 per cent, or 0.5 per cent, to 8321 as of 6.30am AEDT, buoyed by the gains on Wall Street. The local sharemarket closed at a two-week high on Monday, taking it within touching distance of its highest daily close on record after investors pushed US stocks to records last week following reassuring profit reports from America’s big banks.
The S&P 500 rose 0.8 per cent to top 5,860 as of 6.23am AEDT, putting it on track for another record — its 46th this year as investors were betting this US reporting season will once again deliver positive surprises. The Nasdaq 100 added 1 per cent and the Dow Jones Industrial Average climbed 0.5 per cent.
Wall Street is bullish on the outlook for company earnings.Credit: Bloomberg
AI giant Nvidia led gains in megacaps with a 2.9 per cent rise, closing in on Apple as the world’s biggest company. Apple gained 1.7 per cent on a bullish analyst call and Tesla rebounded after last week’s plunge. Goldman Sachs, Bank of America and Citigroup advanced ahead of results.
Strategists have been predicting S&P 500 firms will post their weakest results in the past four quarters, with just a 4.3 per cent increase compared with a year ago, Bloomberg Intelligence data show. Meantime, corporate guidance implies a jump of about 16 per cent. That solid outlook suggests companies could easily beat market expectations.
“Wall Street has underestimated Corporate America lately,” said Callie Cox at Ritholtz Wealth Management. “This environment is tough to get a read on, and I don’t blame anybody who’s approaching this rally with a bit of scepticism. We still think the biggest – and most expensive – risk here is to miss a rebound and an eventual rally higher.”
Meanwhile in the bond market, US Treasury futures were marginally lower while cash trading was closed for a US holiday. The US dollar edged up against currencies such as the Australian dollar. Bitcoin jumped 5 per cent.
Oil declined after China’s highly anticipated Finance Ministry briefing on Saturday lacked specific new incentives to boost consumption in the world’s biggest crude importer, while the country’s economic data remained weak. West Texas Intermediate fell around 2 per cent to just below $US74 a barrel while Brent also slumped.
America’s earnings season unofficially kicked off on Friday, led by financial bellwethers JPMorgan and Wells Fargo. Besides other big banks reporting this week, traders will be paying close attention to results from streaming giant Netflix.
