ASX futures rose 32 points or 0.5% to 6910 by 8:00am AEDT, indicating a gain at the open.
Overseas, the S&P 500 gained 63.98 points, or 1.6 percent, to 4155.17, taking back some of its losses after sliding both Monday and Tuesday. The Dow Jones Industrial Average rose 416.33 points, or 1.3 percent, to 32,812.50. The tech-heavy Nasdaq Composite rose 319.40 points, or 2.6%, to 12668.16.
Stocks were in focus over the past few days due to geopolitical issues, with US House Speaker Nancy Pelosi meeting with Taiwan’s president over the weekend despite a warning from China.
Meanwhile, Federal Reserve officials said they expect the central bank to keep raising interest rates at its coming meetings, dampening market hopes that a slowdown in economic growth would prompt a change in policy.
Ms. Pelosi’s trip hasn’t yet had tangible consequences, and some better-than-expected earnings releases in thin August turnover are holding up sentiment, investors say.
The market’s advances were also fueled by a key economic report. The US services sector kept expanding in July, the Institute for Supply Management reported. The ISM’s measure of conditions for businesses like restaurants, hotels and retailers rose last month to a three-month high.
In the commodity markets, iron ore fell 4.6 per cent to US$108.10, Brent crude oil was down 3.4 per cent at $US97.10 a barrel, gold was down 0.7% at US$1,776.40.
Over in local bond markets, Australian 2 Year government bond yields nudged 2.56% and the 10 Year declined to 3.07%. Abroad, the 2 Year US Treasury note was yielding 3.05% and the 10 Year US Treasury note was yielding 2.70%.
The Aussie dollar jumped to 69.49 US cents, up from 69.17. The Wall Street Journal Dollar Index, which tracks the U.S. currency against 16 others ticked higher to 98.12.
Asia
Chinese shares overturned early gains to finish lower on concerns about mounting tensions between the US and China after US House Speaker Nancy Pelosi visited Taiwan. The benchmark Shanghai Composite Index fell 0.7%, to 3163.67, the Shenzhen Composite Index was down 1.0%, at 2117.19, and the ChiNext Price Index decreased 1.9%, to 2628.82. "Consequently, markets will closely watch if the in-person meeting between US President Joe Biden and China's President Xi Jinping is still on the table and whether there are any economic retaliatory measures, potentially targeting the Taiwan economy," IG market strategist Yeap Jun Rong said in a note. Aviation shares lost ground, with China Eastern Airlines falling 1.4% and China Southern Airlines slipping 3.0%.
Hong Kong’s Hang Seng Index advanced 0.4% to 19767.09, reclaiming some of the ground lost after Tuesday’s selloff, when China’s Caixin services PMI improved further in July. Advances in technology shares mitigated additional declines among property developers. Alibaba Group ended 3.8% higher to end a five-session losing streak, while Tencent Holdings gained 2.6%. Defense shares surged on heightened geopolitical tensions as U.S. House Speaker Nancy Pelosi arrived in Taiwan. Shares of CSSC Offshore & Marine gained 4.7% and AviChina Industry leapt 6.5%. Among the laggards, Country Garden Services fell 3.7%, followed by China Resources Land, which was off 1.9% and Longfor Group, which retreated 1.2%.
Japanese Stocks Close Higher
Japanese stocks finished higher on gains in electronics issues as market expectations of recovery in corporate earnings prevailed over increasing geopolitical tensions with regard to Taiwan. Renesas Electronics rose by 2.9% and Mitsubishi Electric by 2.9%. Daikin Industries rose 4.0% after lifting its fiscal year's revenue and net-profit views. The Nikkei Stock Average gained 0.5% to end at 27741.90. (The other two are earnings and tensions between the United States and China over Taiwan.)
Europe
European Markets Weaken Following Gains in Asian Fragment of US tariff measure
Also lifted Dollar/Renminbi trading volume in the FX Forward market Tripled US House Speaker Pelosi's tour to Taiwan reduced tension fears. The pan-European Stoxx Europe 600 rose 0.5%, and the German DAX and the French CAC 40 were up 1%, led by tech, banking, and property companies.
Chris Beauchamp, an analyst at IG, says: It’s a more encouraging afternoon for stocks after the challenging opening days of the week, as Taiwan and recession fears subside.
London’s FTSE 100 ended 0.5% higher as US House Speaker Nancy Pelosi departed Taiwan for South Korea, “leaving the heightened tensions of the last few days behind her and the risk of a confrontation decreased significantly,” according to Michael Hewson at CMC Markets.
Avast was the biggest riser, rising 44% to close after (CMA) provisionally approved its $8.6 billion takeover by NortonLifeLock, while Talor Wimpey closed up 5.5%. Fresnillo was the session’s leading faller, ending 35.8% weaker after the miner reported a drop in pretax profit and revenue for the first half of 2022, followed by Croda International and Centrica, down 4.1% and 3.3% respectively.
North America
US stocks climbed on Wednesday, the first positive session in August, powered by new earnings reports and a crucial reading on the services sector.
The S&P 500 added 63.98 points, or 1.6 percent, to 4,155.17, regaining a portion of what it lost after it fell Monday and Tuesday. The Dow Jones Industrial Average rose 416.33 points, or 1.3 percent, to 32,812.50. The technology-laden Nasdaq Composite tacked on 319.40 points, or 2.6%, to 12668.16.
Stocks, which had seen renewed pressure in recent days off geopolitical tensions after US House Speaker Nancy Pelosi met with Taiwan president, pushing ahead with a visit that China had earlier warned against. In the meantime, officials at the Federal Reserve said on Wednesday that they expected the central bank to keep raising interest rates in the months ahead, undercutting hopes in markets that slowing economic growth would prompt a shift in policy.
Ms. Pelosi’s trip has yet to translate into tangible consequences, and some better-than-expected earnings reports in thin August trading are boosting sentiment, investors say.
The market’s gains were also fueled in part by a key economic report. The services sector in the US expanded in July, a report from the Institute for Supply Management showed. The ISM’s index of conditions for businesses like restaurants, hotels, and retailers, meanwhile, rose to a three-month high in July.
Following back-to-back losing sessions at the start of August, “healthy risk appetite continues to support (stocks),” said StoneX Financial analyst Matt Weller. The earnings and ISM report have eased concerns that a recession was coming soon, he said.
Earnings have been pretty solid on a beating-expectations basis,” said Olivier Marciot, a global macro portfolio manager at Unigestion, but there are broader issues with the market too. “There’s still plenty of inflation, the central banks are keeping that hawkish rhetoric and we get a bit of geopolitics on top of all of that,” he said.
The yield on the 10-year benchmark Treasury note rose to 2.747% from 2.740% Tuesday. Economic data that has come in weaker than expected has depressed yields in the past few days, Michael Hewson, markets analyst at CMC Markets, said. That has “raised concerns that the US economy could well be slowing sharply,” he said.
Whether the economy is or isn’t officially in a recession, inflation and the pressure it is exerting on the Fed to raise rates is creating an environment for investors that is thoroughly unfamiliar to anything they have come to know in the last several decades, said Aaron Dunn, portfolio manager at Eaton Vance. That won't end soon, he said.
There’s recently been a bounceback in some of the more beaten-up stocks, he said, but those looking for the growth trade to come back could be disappointed. “Stocks are going to be a grind,” he said.
Among corporate movers, PayPal shares surged $8.29, or 9.3 percent, to $97.92 after the hedge fund Elliott Management said it had a $2 billion stake in the payments company. Starbucks climbed $3.56, or 4.3%, to $87.27 after it said demand remains healthy, and it’s able to raise prices enough to help offset rising labor costs.
The vaccine maker Moderna jumped $25.68, or 16 percent, to $186.49 after reporting earnings that exceeded analysts’ expectations and announcing a new $3 billion share-repurchase program.
Airbnb fell $1.32, or 1.1 percent, to $115.02 a day after it swung back to a profit but its outlook disappointed investors. The online dating group Match lost 18%, or $13.47, to $63.24 after reporting results that fell short of forecasts and saying that the chief executive of its Tinder platform is separating from the company.
Advanced Micro Devices, a chip maker, was down $1.20, or 1.2 percent, to $98.09 after reporting a decline in profit and providing a muted forecast for the current period that fell below Wall Street’s estimates.
