The ASX is set to rise today, with ASX 200 futures trading 88 points higher, up 1.22% as of 8:20 am AEST.
The ASX200 finished 32 points (0.46%) higher yesterday at 7186. The Materials (+0.96%), Financials (0.69%) and IT (0.55%) sectors were the strongest. The Health Care (-0.57%), Consumer Staples (-0.03%) and Consumer Discretionary (-0.01) sectors closed lower.
“Stepping back from the month-to-month noise, the labour market remains tight despite the 400 basis points of rate hikes the RBA has delivered to date. Furthermore, yesterday’s job numbers won't give the RBA the breathing room it might have been hoping for to sign off on its rate hiking cycle,” IG markets analyst Tony Sycamore said.
“Recovering from a quick 25-point sell off straight after the jobs data, the big miners led the AS200 higher as the price of iron ore climbed to $120 per tonne. Fortescue (ASX:FMG) Group Ltd was keen to make amends after a tough couple of months on shareholders, rising 4.13% to $20.41. Rio Tinto (ASX:RIO) added 1.82% to $115.45; BHP (ASX:BHP) Group Ltd (LSE:BHP, ASX:BHP) gained 0.78% to $44.14.”
Overnight, major US benchmarks finished higher, led by Resources and Real Estate. All sectors finished in the green.
“The data was upbeat in the US as Retail Sales, ex Autos and Gas rose by 0.2% in August, above market consensus expectations, looking for a fall of -0.1%. Initial jobless claims rose 3,000 to 220,000, indicating a strong labour market,” Sycamore said.
“Tonight sees the release of Industrial Production and Michigan Consumer Sentiment, expected to soften marginally to 69 from 69.5 prior."
What happened yesterday?
Here's what we saw (source Commsec):
US markets
Climbed on Thursday after strong economic reports revived speculation the US Federal Reserve will be able to engineer a soft landing even if it keeps interest rates higher for longer.
SoftBank's Arm Holdings jumped 24.7% following the chip designer's trading debut. Shares of Chipmakers Micron Technology (NASDAQ:MU) and Broadcom (NASDAQ:AVGO) added between 1.3% and 2.2%. Walt Disney (NYSE:DIS) rose 1.2% as Bloomberg News reported the company has held initial talks about selling ABC to Nexstar Media Group. Visa (NYSE:V) slipped 2.6% after the payment processing giant said it was engaging with Class B shareholders on a proposal to convert their shares to Class C or Class A.
- The Dow Jones index rose by 332 points or 1%.
- The S&P 500 index gained 0.8%.
- The Nasdaq index added 112 points or 0.8%.
European markets
Rallied on Thursday after the ECB raised interest rates and signalled that it is likely to be the last hike this cycle. Denmark's central bank also raised its key interest rate by 25 basis points to 3.6%, following the ECB's move earlier in the day.
The continent-wide FTSEurofirst 300 index jumped 1.5%, the most since March. The rate-sensitive real estate sector advanced 3% as European government bond yields retreated. Mining stocks gained 4.2% after iron ore prices hit a five-month high. Energy shares lifted 2.4% as crude prices scaled 2023 highs.
The UK's resources-heavy FTSE 100 index outpaced regional peers with a 2% rise.
Currencies
Were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0747 to US$1.0630 and was near US$1.0645 at the US close.
- The Aussie dollar lifted from 64.19 US cents to 64.57 US cents and was near 64.40 US cents at the US close.
- The Japanese yen firmed from 147.54 yen per US dollar to JPY147.01 and was near JPY147.45 at the US close.
Commodities
Global oil prices rose on Thursday, with US crude oil hitting US$90 a barrel for the first time since November, as expectations of tighter supply outweighed worries about weaker economic growth and rising US crude inventories.
- The Brent crude price rose by US$1.82 or 2% to US$93.70 a barrel.
- The US Nymex crude price gained US$1.64 or 1.9% to US$90.16 a barrel.
Base metal prices rose on Thursday.
- The copper futures price gained 0.7% and the aluminium futures price added less than 0.1% as China's measures to support the economy helped to alleviate prices pressures from high inventories.
- The gold futures price rose by US30 cents or less than 0.1% to US$1,932.80 an ounce.
- Spot gold was trading near US$1,910 an ounce at the US close.
- Iron ore futures gained US3 cents or less than 0.1% to near five-month highs of US$120.56 a tonne as Chinese steel mills lifted production.
Heavily armed
The highly anticipated Arm Holdings PLC IPO also had a big influence. The stock finished 25% higher after it began trading on the NASDAQ. It opened at $56.10 and rallied as much as 30% above its initial public offering price of $51. Shares finished up 24.7% at $63.59.
Chief financial officer Jason Child told MarketWatch on Thursday that Arm’s focus is to take advantage of the skyrocketing costs of making smaller and smaller nanometer-sized transistors for chips.
Chip makers are starting to farm out the cost to Arm.
“It’s allowing us to do the work, and then monetise the work that we do — for IP verification, software verification — we do that and sell it to everyone else at a fraction of the price of what it would cost for them to do it on their own,” Child told MarketWatch.
“What it does is it allows us to actually get higher royalty rates over time because of the cost savings folks are getting by using us versus trying to maybe do more of the work on their own,” Child said.
While Arm’s IPO was reportedly several times oversubscribed, it was also met with anxiety over what appeared to be a high vulnerability to geopolitical tensions should a trade war heat up between the US and China.
What about small caps?
The S&P/ASX Small Ordinaries had a good day yesterday, finishing 0.56% higher at 2,765.30.
It’s a slow news day so far, but you can read about the following and more throughout the day.