Tech share rally paces S&P 500, Nasdaq higher
Communication services and information technology paced all 11 S&P 500 industry groups higher. The VIX slid back below 20.
The Dow was held back by a 2.5 per cent drop in Goldman Sachs. The Wall Street Journal reported that Goldman’s consumer business was being reviewed by the Federal Reserve.
ASX futures were up 34 points or 0.46 per cent to 7428 overnight.
The local currency was 0.8 per cent higher; the Bloomberg dollar spot index edged lower.
On bitstamp.net, bitcoin was 6.3 per cent higher to $US22,293 near 8.40am AEDT.
Rate bets revisited
The yield on the US 10-year note leapt 9 basis points to 3.48 per cent near 4.59pm in New York, in sync with similar moves elsewhere. In the UK, the 10-year yield was 10 basis points higher to 3.37 per cent.
Part of the overall optimism in sentiment was driven by rising expectations that the Federal Reserve will downshift when policymakers announce their next decision on February 1 (February 2 AEDT).
TD Securities said it has revised its forecast to a 0.25 per cent rate rise from 0.5 per cent. It still expects a further 0.25 per cent increase in both March and May, though the tweak points to a lower peak.
In addition, TD said it pushing forward its forecast for a pivot to rate cuts to March 2024 from December 2023.
The final Fed policymaker to speech ahead of the January 31-February 1 meeting was from governor Christopher Waller.
“I currently favour a 25-basis point increase at the FOMC’s next meeting at the end of this month,” Waller said in remarks prepared for delivery at the Council on Foreign Relations in New York. “Beyond that, we still have a considerable way to go toward our 2 per cent inflation goal, and I expect to support continued tightening of monetary policy.”
Kansas City Fed president Esther George, who is retiring this month, told Bloomberg that Fed officials don’t want to raise interest rates by so much that policy becomes overly restrictive and the economy can avoid a sharp downturn.
“We are reaching a point I think where it will be important to start looking around corners,” she said.
Here’s how LPL Financial chief technical strategist Adam Turnquist views US equities: “Buying pressure at higher lows, bullish momentum, and broadening participation in the recovery should continue to support the current drive off the October lows.
“Falling and/or stabilising interest rates, a weaker [US] dollar, and the potential end to the Federal Reserve’s rate hike cycle also provides a more constructive backdrop for the development of a market bottom. Of course, disappointing earnings, sticky inflation, and increased recession risk could bring the defence back on the field.
“But for now, we suspect a first down for the S&P 500 is likely over the coming weeks, defined by a close above 4000 which would finally break the current downtrend resistance line and recapture the 200-[day moving average]. A close above the December highs at 4100 would then confirm a new uptrend is underway.”
Other top stories
Battered super funds eye positive 2023 After a dismal 2022 when the median balanced super fund lost almost 5 per cent, IFM Investors chief economist Alex Joiner says fund managers are looking for the risk on pivot.
Electricity prices will come down – just not yet Treasury analysis shows electricity prices futures have come down since the government’s intervention was announced in December, but that won’t help households or businesses until next year.
The AFR View: There’s nothing very Australian about capping prices Meddling with prices and keeping resources in the ground goes against the ethos of a country built on taking big risks in global commodity markets.
Maybe 2023 won’t be so bad after all – it’s a matter of perspective Three weeks and a couple of Berocca into the new year, some people wonder if the expected economic headache after a blinder 2022 won’t be so bad after all.
ASX futures up 34 points or 0.46 per cent to 7428 overnight
- AUD +0.8% to 69.63 US cents
- Bitcoin +6.3% to $US22,293 near 8.40am AEDT
- On Wall St: Dow +1% S&P +1.9% Nasdaq +2.7%
- In New York: BHP +0.8% Rio +1.4% Atlassian +6%
- Tesla +4.9% Apple +1.9% Amazon +3.8%
- Alphabet +5.7% Microsoft +3.6% Netflix +8.5%
- In Europe: Stoxx 50 +0.6% FTSE +0.3% CAC +0.6% DAX +0.8%
- Spot gold -0.3% to $US1926.08 an ounce in New York
- Brent crude +1.7% to $US87.66 a barrel
- 10-year yield: US 3.48% Australia 3.39% Germany 2.17%
- US prices as of 4.59pm in New York
General Motors says it will spend more than $US900 million to update four factories, with the bulk going to an engine plant in Flint, Michigan, to build the next-generation V8 for big pickup trucks and SUVs.
Fed to downshift in February, first rate cut seen in March 2024: TD TD Securities has revised its forecast for US interest rates, saying it expects rates to rise more slowly, peak at a lower level and hold there for longer.
US economy seen shrinking in next two quarters, survey shows Forecasters put the probability of a recession in the US over the next year at 65 per cent, according to a Bloomberg survey of 73 economists.
Stand aside Washington, here comes Kevin Rudd The ex Labor leader’s strengths as a former prime minister, China expert, and close ties to Anthony Albanese and top Biden officials will be in play from day one.
European shares closed higher on Friday but marked weekly losses as investors took a cautious view of the earnings season and upcoming central bank decisions.
The pan-European STOXX 600 rose 0.4 per cent, lifted by travel & leisure and retail stocks.
Spain’s Cellnex jumped 9.8 per cent after a media report said American Tower and asset manager Brookfield were weighing a possible takeover bid for the mobile phone tower operator.
Denmark’s Orsted, the world’s No. 1 offshore wind farm developer, tumbled 8.7 per cent after announcing a writedown on a large US offshore wind project and an earnings forecast for 2023 that fell short of analyst estimates.
Ericsson slid 4.7 per cent after it reported lower than expected fourth-quarter core earnings as sales of 5G equipment slowed in high-margin markets such as the United States
Russia’s war in Ukraine is hitting Africans particularly hard by exacerbating food insecurity and putting an unnecessary drag on the continent’s economy, US Treasury Secretary Janet Yellen said in Senegal’s capital Dakar.
Yellen said ending the war would be the best thing to help the global economy, but Treasury estimated that a Group of Seven-led price cap on Russian crude oil and refined products to limit Russia’s revenues could save the 17 largest net oil-importing African countries $US6 billion annually.
Lithium’s rising star hit by more cost blowouts The cost of Liontown Resources’ lithium project in WA has blown out for the fourth time in three years as a contractor shortage stokes inflationary pressures.
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