The stage is set for a strong opening on the ASX this morning, with futures pointing to a 0.3% increase early this morning.
There was a mixed picture on Wall Street overnight, with the Dow Jones Industrial Average notching a new record, up 0.3% to 38,797 points, while the S&P 500 slipped marginally by 0.1% to 5,022 points and the Nasdaq slumped 0.3% to 15,943 points.
Heightened speculation
The varied sentiment in the US speaks to the market's watch-and-wait attitude ahead of significant US inflation updates.
In recent weeks, investor speculation about potential rate cuts from the Federal Reserve has invigorated US markets, despite the mixed signals sent by inflation figures.
The likelihood of a Fed rate cut in March has decreased to 15.5%, with expectations for May also cooling to 61%, as per the CME's FedWatch Tool, which highlights the enduring strength of the US economy.
Tech titans, particularly those with their fingers in the pie of artificial intelligence, have spearheaded Wall Street's recent rally.
But there are fluctuations. Overnight Tesla (NASDAQ:TSLA) dipped by 2.8%, while Nvidia’s early surge was tempered, with the chip maker closing with a modest gain of 0.2% despite momentarily eclipsing Amazon (NASDAQ:AMZN) in market valuation.
European markets experienced gains, especially in real estate and retail sectors, driving the FTSEurofirst 300 index up by 0.5%.
The UK didn’t get the memo – the FTSE 100 ended the day unchanged. Comments from the European Central Bank hinted at a moderated approach towards inflation, which caused investors to cool their boots.
On the local front, imminent financial reports from CSL, Challenger, James Hardie, Macquarie Group and Seek are expected, alongside consumer sentiment and business confidence updates, which will be grist for the mill of anxious investors.
Bitcoin and Farrell soar
On the crypto front, Bitcoin crossed the $US50,000 threshold for the first time since late December 2021, buoyed by anticipation of US interest rate reductions and recent regulatory approvals for exchange-traded funds tracking its price.
Bitcoin’s ascent to $US50,000, a 16.3% increase this year, alongside Ethereum’s 4.1% rise to $US2,608, underscores continued investor flirtation with all things tech-related.
There may be good news for the China-Australia trade relationship on the horizon.
Trade Minister Don Farrell is off to Abu Dhabi to negotiate the lifting of trade restrictions on Australian wine and lobster with his Chinese counterpart.
These discussions could potentially ease the bilateral trade tensions that have been hanging around like a rotten lobster since 2020.
Currencies and commodities
In the currency markets, there was a mixed response against the US dollar; the Euro and Japanese yen saw declines, while the Australian dollar recorded gains.
The Euro fell from US$1.0803 to US$1.0755 and was near US$1.0775 at the US close.
The Aussie dollar was up from 65.13 US cents to 65.42 US cents and hovering near 65.30 US cents at the US close, while the yen eased from 148.92 yen per US dollar to JPY149.46 and was near JPY149.30 at the close of play.
Global oil was fairly stable considering geopolitical uncertainties and production shifts in Iraq. Brent crude fell slightly by 0.2% to US$82 a barrel, while there was a similarly tiny 0.1% rise in US Nymex crude to US$76.92 a barrel.
Meanwhile, base metals like copper and aluminium futures underwent positive adjustments, buoyed by anticipation of US inflation data impacts.
Gold futures dipped by 0.3% to US$2,033 an ounce, with spot gold trading close to US$2,020 at the US market's close.
Iron ore futures increased by just 0.12 US cents or 0.1%, ending at US$128.87 a tonne, amid quiet trading during the Lunar New Year and actions by Beijing to stabilise its stock market.
What’s happening in small caps?
The S&P/ASX Small Ordinaries closed at 2,963.10, up 0.084% on the previous day.
Making news this morning, which you can read more about throughout the day with Proactive: