The ASX200 is set for a strong day of gains if ASX Futures are anything to go by as they indicate that an energetic 104-point or 1.3% rise may be on the cards for the market.
The strength comes mostly from an unexpected dip in US core inflation in December, which gave US markets a strong kick of optimism and drove the Bloomberg 'Magnificent Seven' megacaps up an average of 3.7%.
US and European markets
Adding to the enthusiasm, US banks started the 2025 calendar year strongly – the KBW Bank index lifted 4.1%, Goldman Sachs (NYSE:GS) gained 6.0% on its best quarterly profit since Q3 2021 and Citigroup (NYSE:C) surged 6.5% after notching profits in the fourth quarter.
Continuing the strong banking performances, JPMorgan Chase (NYSE:JPM) lifted 2% and Wells Fargo (NYSE:WFC) 6.7% after beating market expectations. BlackRock (NYSE:BLK) gained 5.2% after hitting a record-high asset value of US$11.6 trillion.
The blue-chip Dow Jones gained 1.7% or 703 points, the Nasdaq surged 2.5% or 467 points and the S&P500 lifted 1.8%.
In Europe, markets also climbed as the chances of a second US interest rate cut increased, lifting Reak Estate stocks 3.3% and financials 2%.
The FTSE300 gained 1.2%, mirrored by the FTSE100 which also gained 1.2% as UK inflation also fell from November numbers.
Currencies and commodities
The Aussie dollar managed to make up lost ground in a mixed trading session for the US dollar, lifting from US61.85 cents to close near US62.25 cents.
The Japanese Yen also strengthened, gaining from 157.60 yen per US dollar to near JPY156.50, while the Euro fell, dipping from US$1.0349 to close near US$1.0295.
Global oil prices rose 3% to reach a five-month high as US crude inventories fell by more than double expectations. Brent crude rose by US$2.11 (2.6%) to US$82.03 per barrel, while US Nymex crude gained US$2.54 (3.3%) to US$80.04 per barrel.
Base metals recorded gains, with copper futures rising 1.1% and aluminium futures lifting 1.4% amid concerns over potential EU import bans on Russian aluminium.
Gold futures climbed US$35.50 (1.3%) to US$2,717.80 per ounce, supported by a lower-than-expected US inflation report, raising hopes of Federal Reserve interest rate cuts. Spot gold was near US$2,696 at the close.
Iron ore futures rose by US21 cents (0.2%) to US$100.20 per tonne, boosted by stronger-than-expected credit data from China.