The Australian share market is set to round out the week higher, with ASX 200 futures up 74 points or 0.88% at 8:30 am AEDT.
A rebound in US and European markets, alongside a string of corporate updates, is the likely driver of the positive sentiment.
US markets closed strong
US markets closed stronger overnight, with the Dow Jones up 462 points, or 1.1%, to finish at 35,021. The S&P 500 gained 0.5%, while the Nasdaq rose by less than 0.1%.
Gains were driven by cyclical stocks, still buoyed by optimism about the current US economy.
Salesforce rose 3.1% after several brokerages lifted their price targets, while Deere surged 8.1% on upbeat quarterly profit results.
Nvidia ended 0.5% higher after a volatile post-earnings session, trading between gains of 4.8% and losses of 3.5%.
In contrast, Alphabet (NASDAQ:GOOGL) fell 4.7% after the US Justice Department argued that Google should sell its Chrome browser, and Amazon (NASDAQ:AMZN) dropped 2.2% amid reports of a potential EU investigation into whether the company favours its own products on its online marketplace.
Sugar rush at end
Commentators including the Wall Street Journal point to growing caution in the US stock market, noting that the initial market bounce caused by Donald Trump’s electoral win is starting to wane.
Perhaps a growing understanding of what his economic policies mean for the economy – such as trade tariffs, deportation of cheap labour, widening deficits, blowout inflation and, long term, his promise to close down the Department of Education, to name just a small handful of policies – is starting to kick in.
Analysts at Goldman Sachs (NYSE:GS) forecast that investment-grade and high-yield bond spreads will remain tight through 2025, while JPMorgan (NYSE:JPM) expressed confidence that strength in corporate earnings will support continued market growth.
However, Apollo Global Management (NYSE:APO) warned that expected US Federal Reserve rate cuts could trigger a US$2 trillion exodus from money-market funds.
European markets also rose, breaking their longest losing streak in over two months.
The FTSEurofirst 300 index added 0.5%, with insurance stocks leading gains. Zurich Insurance jumped 3.1% after announcing upbeat three-year targets, while energy stocks benefited from rising oil prices.
The UK’s FTSE 100 climbed 0.8%, as tensions in the Russia-Ukraine conflict drove crude prices higher.
Commodities and currencies
Gold futures rose 0.9%, or US$23.20, to US$2,674.90 per ounce, driven by safe-haven demand.
Brent crude increased by 2%, or US$1.42, to US$74.23 per barrel, while US Nymex crude gained US$1.35 to settle at US$70.10.
Iron ore inched up 0.1% to US$102.02 per tonne, supported by steady near-term demand but weighed down by high inventories.
Base metals retreated, with copper down 0.7% and aluminium slipping 0.1%, reflecting concerns about demand in China and the strength of the US dollar.
In currency markets, the US dollar strengthened. The Euro fell from US$1.0554 to US$1.0462, ending near US$1.0480. The Australian dollar eased from US$0.6530 to US$0.6496, recovering slightly to US$0.6510.
The Japanese yen rose to JPY154.50 per US dollar. Bond yields also ticked higher, with the US 10-year Treasury yield up 1 basis point to 4.42% and the two-year yield climbing 4 basis points to 4.35%.
Looking ahead
Corporate activity will take centre stage in Australia today. a2 Milk has raised its revenue growth guidance for FY25 and announced plans for its first-ever dividend.
Lovisa issued a mixed trading update, reflecting ongoing pressures on discretionary spending. Fulcrum Lithium is set to make its ASX debut at 10:30 am AEDT, adding to the robust activity in the lithium sector.
The economic calendar includes Australian purchasing managers’ indexes (PMIs) and 25 Annual General Meetings (AGMs), with major companies such as Kogan.com, Megaport, and WiseTech Global among those reporting. Orica will trade ex-dividend.
In the US, the release of S&P Global PMIs and the University of Michigan consumer sentiment index will provide further insight into economic trends.
Investors remain attuned to developments in monetary policy, with Chicago Federal Reserve President Austan Goolsbee reiterating his preference for gradual interest rate adjustments.
Meanwhile, escalating tensions in Ukraine continue to drive safe-haven demand across global markets.