ASX futures were up 49 points or 0.7 per cent at 6603 by 8. Open at 0700 GMT on Friday, although it will lead to a positive open.
Overseas, the S&P 500 advanced 1.5%, completing its longest winning streak since March with 10 of 11 sectors finishing above the water line. The tech-heavy Nasdaq Composite Index rose 2.3 percent, concluding Thursday with its longest winning streak since March. The Dow Jones Industrial Average rose 1.1 percent.
More new applications for US unemployment benefits than expected last week reached the highest level in six months yesterday, in yet another sign growth in the labour market is cooling.
Investors broadly anticipate economic data to cool as the Federal Reserve continues hiking interest rates to tame inflation. What analysts said will matter is whether the data gets worse faster or slower. Many hope that central bank policy will bring inflation back from multi decade highs without pushing the US into a recession.
“What the market is wanting to see is that there is some cooling in the labour market, but it’s not going to want to see a crash,” said Kiran Ganesh, a multi asset strategist at UBS.
On the local bourse, the S&P/ASX 200 finished 0.8% up at 6648.0 in the wake of more financials and surging mining stocks.
The materials sector rose 2.5% after losing 5.0% a day earlier, as the benchmark index tracked gains in US stocks.
Iron-ore miners BHP, Rio Tinto and Fortescue were some of the strongest components, gaining between 3.1% and 4.4%.
Bank and wealth manager shares also gained, with Westpac, Commonwealth and ANZ up between 0.8% and 1.8%.
That shift toward its resources stocks which make up almost 50% of the ASX 200 by market capitalization meant an index of the top 20 largest stocks lifted 1.1%, outperforming the broader market.
In commodities, iron ore increased 2.2% to US$114.85, while Brent crude oil was up 3.9% to US$104.65 and gold was steady around US$1739.40.
In local bond markets, the yield on Australian 2 Year government bonds turned around after days of falling, and levelled up to 2.46% while the 10 Year gained to 3.46%. Overseas, 2 Year US Treasury notes rose 3 bps to 3.01% while 10 Year US Treasury notes fell 4 bps to 2.99%.
The Australian dollar climbed to 68.38 US cents after ending the last trading session at 67.80. The Wall Street Journal Dollar Index, which measures the US dollar against 16 other currencies declined slightly to 98.87.
Asia
China stocks closed higher for the session. Investors are still balancing strong stimulus measures from Beijing against the Fed’s restrictive policy stance, a heightened risk of a US recession and further concerns over new lockdowns against Covid-19 in several Chinese cities. The benchmark Shanghai Composite Index gained 0.3% to end at 3364.40, while the Shenzhen Composite Index ended 0.9% higher at 2227.66. The ChiNext Price Index, which is heavily weighted toward technology, led gains with a 1.7% rise to 2849.71. Passenger car and commercial vehicle manufacturers were among the big gainers, as the auto sector continues to be a major beneficiary of China’s consumption stimulus policies.
Hong Kong stocks ended higher, with the benchmark Hang Seng Index gaining 0.3% to 21643.58 as lower oil prices supported sentiment. With oil prices falling, equities are finding support as cheaper energy costs encourage hope Asian inflation may be receding, said Oanda senior market analyst Jeffrey Halley in a note. The gain was broad-based, with Geely Automobile up 6.7%. Li Ning advanced 3.8%, Galaxy Entertainment climbed 3.1% and Anta Sports advanced 2.6%. The tech sector dropped, with the Hang Seng Tech Index losing 0.5% to 4780.04.
The Nikkei Stock Average added to earlier gains to close up 1.5% at 26490.53, buoyed by a slight easing of concerns over fuel costs. “On the flip side of the coin you have Asia’s Caligula’s of energy importing absolutely loving the price slump in oil. Japan, China, South Korea and Taiwan,” Oanda’s senior market analyst Jeffrey Halley writes in a note. Toyota Motor was up 2.3 percent, Honda Motor was up 1.5 percent and Nissan Motor rose 1.8 percent. Aeon Co. gained 11% when its 1Q net earnings almost tripled versus the year before. Sumitomo Mitsui Trust rose 1.3% after it announced an investment in Apollo Global Management’s alternative assets portfolio.
Europe
European markets climbed as investors digested the potential economic and political ramifications of the resignation of the U.K. Prime Minister Boris Johnson. The pan-European Stoxx Europe 600, along with French CAC 40 and German DAX, were all up over 1%, led by automotive, mining and energy stocks.
“The pound was noticeably stronger on the news that Johnson had resigned as leader of the Conservative Party,” writes Trevor Greetham, Royal London Asset Management’s head of multi asset. “A leadership election that seems very uncertain and doesn’t have a clear front-runner should be something that creates uncertainty in financial markets, but a continuation of the chaos we have seen in recent weeks was arguably worse.”
London’s FTSE 100 went up again on Thursday, adding to Wednesday’s gains. In UK Prime Minister Boris Johnson’s resignation announcement day, the pound gained ground and London’s blue-chip index advanced 1.1%, helped by miners.
Although currencies can be responsive to changes in politics, analysts consider British shares to be relatively shielded from the U.K.’s political turmoil, as FTSE 100 companies generate around 75 percent of their revenues outside Britain.
“A sharp recovery in copper prices from 18-month lows over the past 24 hours, is supporting the basic resource sector… after reports out of China suggested that the Ministry of Finance was looking at possibly bringing forward around $220 billion of infrastructure spending by local governments,” Michael Hewson of CMC Markets UK said.
Anglo American jumped 7.1%, Glencore was up 6.1%, Antofagasta rose 7.4% and Rio Tinto advanced 3.7%.
North America
US stocks closed higher for the fourth session in a row on Thursday, buoyed by shares ranging from banks to consumer-focused companies.
Major indexes have advanced most of this week, even after investors received some mixed economic data. The number of people filing new applications for US unemployment benefits rose to a six-month high last week, a signal the labour market is cooling, a report Thursday showed.
Investors broadly expect economic data to weaken as the Federal Reserve presses ahead with raising interest rates to try to rein in inflation. What will matter, analysts say, is how fast or slow the data deteriorates. And many are hoping that central bank policy will take inflation down from multi decade highs without pushing the US into recession.
“What the market is trying to see is that there is some cooling in the labour market but it’s not going to want to see a crash,” said Kiran Ganesh, a multi asset strategist at UBS.
The S&P 500 gained 1.5%, marking its longest winning streak since March as 10 of 11 sectors finished in the green. The tech-heavy Nasdaq Composite Index rose 2.3% and also ended Thursday with its longest winning streak since March. The Dow Jones Industrial Average rose 1.1%.
Investors will turn next to Friday’s employment report. Economists surveyed by The Wall Street Journal forecast that US employers added 250,000 jobs in June, down from a pace of 390,000 in May.
GameStop rose $17.69, or 15 percent, to $135.12 after the retailer announced on Wednesday that it would split its stock 4-for-1.
Bed Bath & Beyond gained 97 cents, or 22 percent, to $5.44 after its interim chief executive, Sue Gove, detailed in a Securities and Exchange Commission filing the purchase of 50,000 shares of the company’s stock.
Seagen shares climbed $2.82, or 1.6%, to $177.95 after The Wall Street Journal reported Merck & Co. is in advanced talks to acquire the cancer biotech company in a deal that could be valued at around $40 billion or more.
In bond markets, the yield on the benchmark 10-year Treasury note climbed to 3.007 percent from 2.911 percent Wednesday, and the yield on the two-year note rose to 3.039 percent from 2.961 percent. When the latter rises above the former, investors get something known as a yield curve inversion: a market signal that has frequently warned of recessions in the past.
When prices fall, bond yields rise.
In commodity markets, oil prices rose after falling below $100 a barrel earlier in the week over fears that an impending recession will dampen demand for crude. US crude oil leaped $4.20, or 4.3%, to $102.73 a barrel, notching its largest one-day percentage gain since May.
Natural-gas futures jumped 14% to $6.297 per million British thermal units, after the US Energy Information Administration reported that domestic stockpiles are more than 12% below normal for this time of year following a weekly build that was much smaller than analysts and traders were expecting.
