The ASX is likely to be in the green today, with ASX 200 futures 0.6% higher at 7,260 points at the end of the US session.
IG analyst Tony Sycamore said fears of wage prices spiralling out of control were potentially put to bed with the release of yesterday’s data.
Investors were “reassured by the release of the Q1 Wage Price Index data that came in at 0.8% for the quarter, below economics forecasts for a 0.9% rise, easing fears that wage prices are spiralling out of control,” Sycamore said.
“All eyes are on today’s April Labour Force report at 11.30am. The market is looking for a 25,000 rise in jobs and for the unemployment rate to remain unchanged at 3.5%.”
Positive figures are unlikely to halt rate rises, with National Australia Bank factoring in two more and urging the Reserve Bank of Australia to hit its peak position as soon as possible to mitigate against uncertainty.
"We need to get to the top of the cycle so people get certainty and know where their money is going. And I think that's the biggest thing that's worrying households," NAB chief executive Ross McEwan told ABC radio.
On Wall St, the S&P 500 closed 1.2% stronger, the Nasdaq Composite index gained 1.3% and the Dow Jones Industrial Average lifted 1.2%.
Sycamore said fears also abated in the US.
“US equity markets surged overnight, on optimism that a deal will soon be struck to avoid default and lift the US debt ceiling.
“Two signs of progress stood behind the move. President Joe Biden’s announcement that he will cut short his trip to Asia is viewed as a sign of his commitment towards making a deal. The second, a decision to narrow the number of staff on the negotiating team, evidence that talks have moved to a more advanced stage.
“The glimpse of a debt deal was all that was needed for the Nasdaq to accelerate its break higher to be closing in on the August 2022 13,740 high. Tesla (NASDAQ:TSLA) rose 4.4% after Elon Musk, who has never used traditional advertising, said that the company would begin advertising its cars. Mega tech names Nvidia and Meta are both up more than 100% Year to Date.”
The run down
Here’s what we saw in the markets yesterday (source Commsec):
US markets
Advanced on optimism over a potential deal on the US$31.4 trillion US debt ceiling. US President Joe Biden expressed confidence there will be no US default and US House of Representatives Speaker Kevin McCarthy regional bank shares lifted sentiment, led by a 10.2% surge in Western Alliance Bancorp a day after the bank said deposits grew by more than US$2 billion in the quarter ended May 12.
The KBW regional bank index jumped 7.3%, notching its biggest one-day percentage gain since January 6, 2021. Also providing support was a 4.4% lift in Tesla shares after its annual shareholder meeting on Tuesday.
Retailers Target (NYSE:TGT) and TJX Companies (NYSE:TJX) forecast current-quarter profit below expectations despite beating estimates for the first quarter. Shares of Target rose by 2.6%, while TJX Companies closed 0.9% higher after a choppy session.
Shares of big technology stocks Amazon (NASDAQ:AMZN) (+1.9%), Meta Platforms (+1.5%), Microsoft (NASDAQ:MSFT) (+1%), Alphabet (NASDAQ:GOOGL) (+1.1%) and Netflix (NASDAQ:NFLX) (+1.9%) all advanced. At the close of trade, the Dow Jones index rose by 409 points or 1.2%. The S&P 500 index gained 1.2% and the Nasdaq index added 157.5 points or 1.3%.
European markets
Closed mostly lower on Wednesday. Food and beverage stocks recorded the biggest losses, down 1.3%. Shares of German lender Commerzbank (ETR:CBKG) fell by 3.8% after its net interest income forecast for the full year fell short of analysts' expectations.
The continent-wide FTSEurofirst 300 index fell by 0.1% and the UK FTSE 100 index lost 0.4%.
Currencies
Were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0863 to US$1.0810 and was near US$1.0835 at the US close.
- The Aussie dollar rose from US66.28 cents to US66.73 cents and was near US66.60 cents at the US close.
- The Japanese yen eased from 136.67 yen per US dollar to near JPY137.65 at the US close.
Global oil prices rose by about US$2 on Wednesday as optimism over oil demand and US debt ceiling negotiations outweighed worries about abundant oil supply. US crude inventories rose by 5.04 million barrels last week to 467.6 million barrels, compared with analysts' expectations for a 900,000 barrel drop.
- The Brent crude price rose by US$2.05 or 2.7% to US$76.96 a barrel.
- The US Nymex crude oil price added US$1.97 or 2.8% to US$72.83 a barrel.
- Copper futures rose by 2.4% after Chinese home prices rose in April, boosting hopes for a demand recovery in the world's top metals consumer.
- Aluminium futures gained 1.6%.
- The gold futures price fell by US$8.10 or 0.4% to US$1,984.90 an ounce.
- Spot gold was trading near US$1,982 an ounce at the US close.
- Iron ore futures rose by US54 cents or 0.5% to US$107.38 a tonne on hopes of improving Chinese demand after some mills resumed production.