ASX to open higher; Nasdaq leads gains on Wall Street

   2023-05-22 17:05

Natasha Rudra

Australian shares are set to open higher as investors turned to tech stocks at the start of a second week of uncertainty on Wall Street. Brinkmanship over the US debt ceiling continues to plague markets.

President Joe Biden and Republican leader Kevin McCarthy were set to meet in Washington DC after Wall Street closed.

Two Federal Reserve officials have signalled they foresee more interest rate rises. Noted hawk and Federal Reserve Bank of St. Louis President James Bullard said he expects the central bank will need to raise interest rates twice more this year to quell inflation. Bullard does not vote on the FOMC this year.

“I’m thinking two more moves this year – exactly where those would be this year I don’t know – but I’ve often advocated sooner rather than later,” he told an American Gas Association financial forum.

His colleague, Minneapolis Fed President Neel Kashkari, who does vote on the FOMC, said it was important that the Fed did not indicate it was done with tightening.

“If we were to skip in June that does not mean we’re done with our tightening cycle, it means to me we’re getting more information. Do we then start raising again in July, potentially?” he said.


The latest marker of underlying US price pressures will offer little hope of settling the debate among Federal Reserve officials about whether they’ve made enough progress on inflation to step off the monetary-policy brakes.

The Fed’s preferred price metrics on Friday are projected to show inflation remained elevated in April, running more than double the central bank’s goal. Minutes of its early-May meeting on Wednesday may help shed some light on officials’ appetite for standing pat next month.

And a new Federal Reserve report revealed nearly a third of Americans were forced to go without medical care in the past year because they could not afford it. Some 73 per cent of adults were “doing at least OK financially” as of October, down five percentage points from a year earlier and among the lowest levels since 2016, the annual Survey of Household Economics and Decisionmaking showed.

Edward Moya, senior market analyst at OANDA: The latest round of Fed speak sounds like the central bank is trying to convince markets that rates will stay higher for longer. The only way to do that is for Fed officials to say that they are not quite done with their rate hiking campaign.

The Fed is slowly convincing markets that they won’t be so quick to pivot to rate cuts later this year. Fed rate cut bets are disappearing for both the June and July meetings. Treasury yields edged higher following Fed’s Bullard and Kashkari’s comments. If we didn’t have regional banking concerns on the backburner, yields would have pushed significantly higher. Credit conditions are going to tighten and that should in theory do the rest of the Fed’s tightening work that they were planning on doing.

ASX futures were up 11 points or +0.1 % to 7,294 near 3.22am AEST

  • On Wall St: Dow -0.4% S&P 500 +0.1% Nasdaq +0.4%
  • In New York: BHP flat Rio -0.5% Atlassian +8.1%
  • Tesla +3.1% Apple -0.5% Amazon -1.1%

The local currency -0.1% to 66.47 US cents

On, bitcoin was -0.4% to $US26,800 near 3.19am AEST

The yield on the US 10-year note was up 3 basis points to 3.71%

On Wall Street, indexes inched upward after a stalled start. The Nasdaq 100 advanced, even with chipmakers under pressure, and surpassed a 52-week high.

“There is a lot of showmanship around the debt ceiling,” said Sarah Hewin, senior economist at Standard Chartered. “The closer we get to June 1 without a resolution, the greater the risk of an accident so there is a lot of potential for markets to get concerned.”


In the meantime, tech is one beneficiary of the uncertainty. Elyse Ausenbaugh, a global investment strategist at JPMorgan Wealth Management, said mega-cap tech already “went through that phase of retrenching and refocusing their businesses, and so investors are starting to gravitate there.”

The debt ceiling is “all-consuming now,” wrote Chris Low, chief economist at FHN Financial. “But when Congress raises it, attention will return to the economy and the Fed.”

Today’s agenda

Local: Reserve Bank of Australia head of domestic markets David Jacobs speech

Overseas data: Euro zone Markit services and manufacturing PMI May; Nikkei manufacturing and services PMI May; US Markit manufacturing and services PMI May; US Richmond Fed index May

Other stories


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Greenhill agrees takeover with Japanese banking giant Mizuho Sources on Monday evening said senior management had been briefed on the plan, which values the company at around $1 billion.

Market highlights

ASX up 11 points or +0.1 % to 7,294 near 3.22am AEST

  • AUD -0.1% to 66.47 US cents
  • Bitcoin -0.4% to $US26,800 near 3.19am AEST
  • On Wall St: Dow -0.4% S&P 500 +0.1% Nasdaq +0.4%
  • In New York: BHP flat Rio -0.5% Atlassian +8.1%
  • Tesla +3.1% Apple -0.5% Amazon -1.1%
  • Stoxx 50 -0.2% FTSE -0.2% DAX -0.3% CAC -0.2%
  • Spot gold -0.1% to $US1,975.50 /oz at 1.13pm in New York
  • Brent crude +0.9% to $US76.30 a barrel
  • Iron ore $US102.10 a tonne
  • 10-year yield: US 3.71% Australia 3.59% Germany 2.45%
  • US prices as of 1.23pm in New York

United States


Apple’s rally in 2023 has brought it back to the brink of a historic threshold: a $US3 trillion market valuation. The stock has soared 35 per cent this year, adding nearly $US690 billion in market value and putting Apple within striking distance of its January 2022 record.

“In my career, I never envisioned a company of this size, but then I never envisioned a company capable of generating more than $US100 billion in free cash flow in a year,” said Patrick Burton, a portfolio manager of the MainStay Winslow Large Cap Growth Fund, which owns nearly 4.5 million shares of the Cupertino, California-based firm, as of the latest data. “When you look at the underlying metrics, it’s understandable why Apple has done so well.”

Chipmaker Micron fell 2.8 per cent after China said the company’s products failed a cybersecurity review.

Dow component Chevron fell 1.7 per cent as the oil major said it would acquire PDC Energy in an all-stock transaction for $US7.6 billion, including debt.

PacWest Bancorp rose 6.3 per cent after the regional lender entered into an agreement to sell a portfolio of 74 real estate construction loans to a subsidiary of Kennedy-Wilson.



Adani Group shares surged as much as 19 per cent, extending gains spurred by an Indian court panel’s report that found no conclusive evidence of stock-price manipulation as alleged by US short seller Hindenburg Research.

The 10 Adani stocks added about $US10 billion to their market value in Monday’s session, the most since Hindenburg’s scathing report in January. Flagship Adani Enterprises surged about 19 per cent.


Edward Moya, senior markets analyst at OANDA: Gold will likely remain a choppy trade as we head towards the X-date, but if DC is able to get a deal done early this week, that could lead to a decent sell-off for bullion towards the $US1950 region.

Stephen Innes, managing partner at SPI Asset Management: Oil prices have bounced off the Asia lows as traders are digesting a probable end-of-week deal to the debt limit saga, a visible seaborne reduction in OPEC exports, and a fundamental analysts report (Goldman) is getting passed around that suggests the IEA demand upgrades reflect that strong EM and global services demand continue to outpace weaker DM and manufacturing environments.

Russia’s refineries have processed less crude in May due to seasonal maintenance, but the drop in supplies to the facilities was too small to provide concrete evidence that the country has fully implemented its pledged production cuts.

The Kremlin said it would reduce crude production by 500,000 barrels a day from February levels to support oil prices. Surging oil exports from Russian ports have cast doubt on these claims, with the International Energy Agency estimating last week that the country has made less than half the pledged curbs.

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