Australian shares are expected to open a tiny bit higher, with ASX 200 futures trading up 6 points (+0.07%) to 8,203 as of 8:30 AM AEDT.
The ASX will close early today at 2:10 PM AEDT and will remain closed on Christmas, Boxing Day and next week on New Year’s Day, with market participants advised to plan accordingly.
High-growth sectors in vogue
Local optimism is expected to follow gains in US equities, driven by a rebound in technology stocks as the Nasdaq again nears record highs.
There’s a broader theme of rotation back into high-growth sectors – but watch for the sting of upward pressure on US Treasury yields and a stronger dollar, which could yet temper enthusiasm for risk assets.
In overnight trading, the Nasdaq rose 0.98%, bolstered by strong performances from semiconductor giants such as NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO) and Advanced Micro Devices (NASDAQ:AMD), which gained 3.7-5.5%.
The S&P 500 climbed 0.73%, while the Dow Jones added 0.16%.
By contrast, the Russell 2000 dipped 0.39%, reflecting weakness in smaller-cap stocks.
Australian technology stocks are likely to benefit from the overnight rally in global tech sectors.
The Information Technology sector in the ASX rose 1.46%, with gains mirrored across Financials (+2.38%) and Consumer Discretionary (+2.30%).
Currencies and commodities
The Australian dollar was flat against the greenback, trading at 62.48 US cents at the close of play yesterday.
Among commodities, gold declined 0.73% to US$2,625.7 per ounce, while iron ore held steady at US$103.84.
Oil remained flat, with WTI crude at US$69.45 per barrel.
Economists will be watching closely as the Reserve Bank of Australia (RBA) delivers its December 2024 meeting minutes, due at 11:30 AM AEDT.
The minutes could provide key insights into the central bank's monetary policy outlook for 2025, especially as it remains one of the few not to cut interest rates.
Looking ahead, economic data from the US, including unemployment claims, will be published late Friday Sydney time, which could influence market sentiment heading into the new year.
Investors are also digesting geopolitical developments, including a US investigation into China’s chip industry, which could affect semiconductor supply chains globally.
With trading volumes expected to thin over the holiday period, market participants may see increased volatility, creating both risks and opportunities as the year draws to a close.
Plenty of runway
IG analyst Tony Sycamore yesterday afternoon enthused about Asian equity markets, which were “bathing in a sea of green” – led by the ASX200, which soared 110 points (1.37%) to 8,177. Sycamore listed a range of reasons for the turnaround:
“Friday night's Core personal consumption expenditures (PCE) inflation data was better than expected, easing concerns after last week's Fed meeting. Core PCE stayed at 2.8% year on year in November, below the 2.9% expected.
“The US Senate passed legislation over the weekend to extend public funding and end a brief government shutdown. While Congress might try to address the debt limit early in the New Year, the actual deadline for debt limit action is thought to be around July 2025. So, there is plenty of runway there now.
“The US rates market starts this week pricing in 44 basis points (bp) of Fed rate cuts for 2025, almost back to what was priced this time last week before it collapsed to 31bp after Thursday's hawkish Fed rate cut.
“The rebound in pricing in the US rates market supports our view that last week's post-FOMC reaction was likely the result of a position wash in illiquid markets rather than an unexpected shift by the Fed.
“The ASX200 pulled back a healthy 463 points or 5.4% from its December 8514 high to last Friday's 8051 low. This marks the ASX200’s first 5% pullback since August and a continuation of the two steps forward one step back type price action viewed in 2024.”
Market snapshot
- S&P 500: +0.3% to 5,950 points.
- Nasdaq: +0.6% to 19,685 points.
- FTSE: +0.2% to 8,102 points.
- EuroStoxx: +0.1% to 502 points.
- Spot gold: -0.4% to $US2,610/ounce.
- Brent crude: -0.2% to $US72.77/barrel.
- Bitcoin: -3.8% to $US92,945.
Source: ABC
From all of us here at Proactive Australia, have a safe, happy and prosperous festive week – Merry Christmas!