ASX futures rose 13 points, or 0.2 per cent, to 7157 as of 7.30am AEST on Thursday, indicating a modest increase at the open.
Overseas, the S&P 500 finished 1 percent higher after the broad-market index ended down 0.8 percent on Tuesday. The Nasdaq Composite Index gained 1.5 percent, recovering from a steep slump in tech stocks on Wednesday. The Dow Jones industrial average rose 0.6%.
US stocks advanced late in the afternoon after minutes from the Federal Reserve’s most recent meeting were released. The records indicated officials talked about “restrictive” monetary policy, but were concerned about how further aggressive interest rate increases could cool the booming labour market.
The Fed minutes gave few, if any, surprises to officials’ thinking, said Phillip Toews, chief executive of Toews Asset Management. Wednesday’s rise, which built steam through the afternoon, might reflect more than anything the feeling that many stocks had already priced in enough doom. “I think very likely we are in a small bear market here,” he said.
Below, the S&P/ASX 200 firmed 0.4% to 7155.2 on Wednesday, making up for the losses of the previous session as heavyweight financial and materials stocks rallied.
One of the biggest companies by market capitalization gained more than 1% (shares in 10 of the 13 biggest companies by market capitalization gained ground), leaving the benchmark index up 0.1% on the week.
Banks led the sector with ANZ, Commonwealth, Westpac and NAB adding between 1.0% and 1.8% each, while iron-ore miners BHP and Rio Tinto advanced 1.1% and 1.35%, respectively.
Tech stocks trimmed the overall advances, with the sector slumping 3.0% for a 33% drop year-to-date in 2022. Block dropped 5.5% while WiseTech and Xero lost 3.2% and 1.1%, respectively.
Fisher & Paykel Healthcare down 2.3% to $18.29, the Kiwi respiratory products company refusing to provide any guidance for fiscal 2023, in light of the uncertainty over further COVID surges and the possibility that it would have to deal with a personnel shortage among its hospital customers.
Brent crude oil in commodity markets was up 0.7% at US$114.31 a barrel. Iron ore rose 2.2% to US$133.40. As for gold, it fell by 1% at US$1852.50.
Local bond markets rose similar to moves abroad. Australian 2 Year government bond yield was 2.35%, and 10 Year was 3.24%. US bond markets declined after building a flight to safety on Tuesday. The yield on US Treasury 2 Year notes edged to 2.49%, with the 10 Year steady at 2.75%. Yields fall as prices rise.
The Australian dollar was worth 70.85 US cents at 7.00 am AEST, lower than an overnight close of 71.06 US cents. The Wall Street Journal Dollar Index, which measures the US dollar against 16 other currencies, climbed to 94.74.
Asia
Stocks in China closed higher, rebounding from large losses on Tuesday. While many analysts expect more near-term volatility as China’s pandemic reemergence is not fully contained yet, analysts at China Fortune Securities believe the market can sustain a wide rally from here, as more policy support measures are expected to be introduced. The Shanghai Composite Index advanced 1.2% to end at 3107.46, and the Shenzhen Composite Index climbed 1.2% to 1944.88. The ChiNext Price Index gained 0.3% to 2325.60. The biggest advances came from auto services providers, car makers and oil engineering companies.
Hong Kong’s Hang Seng Index added 0.1% to 20141.08. The continued downtrend in risk assets remains in effect, but signs of consolidation have hope currency that equity markets might be close to a bottom soon, said Tina Teng, markets analyst at CMC Markets, in an email, adding that the S&P 500 has bounced off session lows over the past few sessions. Top gainers on the HSI are HSBC up 3.4%, Xinyi Solar rising 3.2% and BOC Hong Kong 1.7% ascendant. Guangzhou R&F fell 2.5% and Li Ning, 2.8% and JD.com declines 2.2%. The Hang Seng TECH Index is down 0.4% at 4014.66.
Japanese shares fell on declines in auto and e-commerce stocks as worries about higher operating costs and slower economic growth persisted. Mitsubishi Motors slumped 3.5% and Rakuten Group fell 4.2%. The Nikkei Stock Average declined 0.3% to 26677.80.
Europe
European markets climbed as investors tiptoed back into stocks ahead of the latest US Federal Reserve minutes. The pan-European Stoxx Europe 600 was up 0.6%, along with the German DAX and the French CAC 40, which rose 0.7%.
“European markets have had a more positive bias today, edging higher on a day devoid of anything in the way of drivers this morning after yesterday’s modest falls,” said CMC Markets analyst Michael Hewson.
The FTSE 100 in London closed up 0.51 percent on Wednesday, a record high since May 5. Among outperformers was energy supplier SSE PLC, whose shares were bounce back after a steep drop on Thursday amid fears about a potential windfall tax from the UK government, according to Michael Hewson, chief market analyst, CMC Markets UK.
“Reports that a windfall tax would be too difficult to implement were also supporting sentiment today following yesterday’s declines, Centrica PLC and Drax Group PLC both higher,” Mr. Hewson says. The pound also regained ground it had lost yesterday, especially versus the euro as scepticism creeps in that the ECB will be able to deliver on its promise to hike rates twice by September, he adds.
North America
US stocks finished up, as investors digested minutes from the latest meeting of the Federal Reserve, looking for clues about the trajectory of forthcoming interest-rate increases.
Stock indexes turned green in early trading after opening briefly lower. The benchmarks climbed after 2 pm New York time, when minutes from the Fed’s most recent meeting earlier this month were released.
The S&P 500 ended 1% higher, after the broad-market index settled down 0.8% on Tuesday. The Nasdaq Composite Index closed up 1.5 percent, recouping a big selloff of tech stocks the previous day. The Dow Jones Industrial Average rose 0.6%.
Consumer-discretionary stocks led the S&P 500’s advance, climbing 2.8%. Several retail companies, including Nordstrom and Express, raised their outlooks for 2022, while others such as Dick’s Sporting Goods said business was not getting worse. The brighter outlooks were a welcome contrast to last week, when Target and Walmart reported disappointing results.
“Some investors were hoping for retail Armageddon,” said Matt Peron, the director of research at Janus Henderson Investors. “The story line was that this was going to be another bruising week. Now the market is in a relief rally around the consumer sector.”
Stocks are off to a rocky start this week, buffeted by worries that the Fed will tighten monetary policy to combat the recent bout of high inflation, and relevant how sluggish of a slowdown in growth that can cause. The S&P 500 is off about 18 percent from its most recent record high in January and fell briefly into bear-market territory last Friday before trimming losses.
“It’s been very volatile, to say the least. This ties into the question of recession, whether there is one coming or not. And that’s basically what the market has been wrestling back and forth between,” said Fahad Kamal, chief investment officer at Kleinwort Hambros.
Minutes from a Federal Reserve gathering earlier this month were released at 2 p.m. in New York, offering further signals for investors about policymakers' perspectives on the economy and inflation. Orders of durable goods in the US rose 0.4% month-on-month in April, a weaker growth than expected by economists.
The Fed minutes didn’t contain all that many surprises in terms of officials’ thought process, said Phillip Toews, chief executive of Toews Asset Management. The rally on Wednesday, which gained strength through the afternoon, might reflect more than anything a sense that many stocks had simply fallen enough already. “I think we might be in a slight bear market here,” he said.
Stocks have plunged throughout 2022 as investors have recalibrated to spiraling prices for consumer goods and the Fed’s response. But as rates have risen and the economy’s outlook soured, the shares of many companies have appeared ever more pricey, at least relative to their earnings, said Sean O’Hara, president of Pacer ETFs Distributors.
“When one goes up,” Mr. O’Hara said, “the other has to go down.”
The yield on the benchmark 10-year Treasury note dipped to 2.746% from 2.758% on Tuesday. It has fallen for five of the last six trading days. Yields fall when prices rise.
“The market is discounting the slowdown that at some point will come from the Fed tightening. It also estimates inflation in 2023 will come down to a much more reasonable pace,” said Antonio Cavarero, who heads investments at Generali Insurance Asset Management.
Government debt has historically held up well in periods of slower economic growth, spurring Wall Street to a more stable stance in the bond market in recent days.
Oil prices rose, with the global benchmark Brent crude up 0.4 percent at $114.03 a barrel. The Biden administration has not ruled out a ban on oil exports to lower domestic fuel prices, the US energy secretary said, according to Reuters.
Among individual stocks, shares of Snap rose 11% in 4 pm trading. The Snapchat maker’s stock slumped 43% on Tuesday after it provided a profit warning, blaming macroeconomic conditions that have worsened at a quicker and deeper pace than had been anticipated.
“There has obviously been a revaluation of tech valuations. How far the declines extend is difficult to know, but some of these are quality businesses and are trading much cheaper than they have recently,” Mr. Kamal said. “If you’re a long-term investor, that’s something to look out for.”
The retailer Nordstrom rose 14 percent after lifting its guidance for full-year revenue growth. Apparel company Express soared 6.5% following a narrower-than-expected loss and lifted sales guidance. Dick's rose 9%.
Home builder Toll Brothers gained 8.5% after posting revenue and profit that topped analysts’ estimates.
