The Australian share market is expected to open higher when trade starts today, sustained by positive momentum from global markets earlier in the week.
Gains on Wall Street on Wednesday and a strong performance in European share markets yesterday are expected to support the local bourse, with mining and healthcare stocks leading the charge.
Wall Street closed
Trading was paused yesterday for a national day of mourning to honour the life of former President Jimmy Carter, but equity futures were pointing lower for US markets, reflecting investor caution over geopolitical and economic developments.
Futures linked to the Dow Jones fell 56 points (0.1%), the S&P 500 dropped 14.5 points (0.2%), and Nasdaq 100 contracts shed 59.25 points (0.3%).
On Wednesday, the Dow Jones rose 107 points (0.3%) and the S&P 500 gained 0.2%, while the Nasdaq slipped marginally by 0.1%, dragged down by weakness in the technology sector.
European shares rally
European markets ended Thursday higher, with the FTSEurofirst 300 index rising 0.5% with strong performances in mining and healthcare.
London’s FTSE 100 gained 0.8%, bolstered by a 14-month low in the British pound, which made UK exports more competitive.
Mining stocks were the highlight, with Rio Tinto (ASX:RIO), Anglo American (JO:AGLJ) and Antofagasta (LON:ANTO) shares climbing between 1.5% and 3.3%.
The basic resources sector logged its best performance in a month, hitting a three-week peak as strong demand for metals persisted.
Healthcare stocks added 1%, further boosting the continent-wide index.
UK mid-cap stocks faced pressure, however, with the FTSE 250 up only 0.3% after steep losses earlier in the week.
Concerns about increased borrowing costs and higher corporate taxes planned by UK finance minister Rachel Reeves drove volatility, as benchmark UK 10-year gilt yields surged to their highest levels since 2008.
Commodities strengthen; currencies climb
Global commodities saw broad-based gains. Brent crude oil climbed 1.0% to US$76.92 per barrel, and WTI crude advanced 0.8% to US$73.92, supported by cold weather in the US and Europe that boosted heating fuel demand.
In metals, copper prices rose 1.2%, marking a sixth consecutive session of gains as technical momentum and concerns over potential US tariffs drove demand.
Aluminium surged 1.6%, while iron ore added 0.4% to US$98.09 per tonne, supported by accelerated purchases from Chinese steel mills following new stimulus measures.
Gold futures rose by US$18.40 (0.7%) to US$2,690.80 an ounce, a near four-week high, as safe-haven demand strengthened amid concerns over economic policy uncertainty.
In currency markets, the Australian dollar climbed back to 61.95 US cents, supported by higher commodity prices. The Euro rose to US$1.0316, while the Japanese yen strengthened to JPY158.10 per US dollar.
US economic data and outlook
US economic data painted a mixed picture. Challenger job cuts dropped to 38,792 in December from 57,727 in November, below market expectations of 65,000, suggesting resilience in the labour market.
US government bond yields retreated, with the 10-year Treasury yield steady at 4.69% and the two-year yield easing to 4.27%.
Philadelphia Federal Reserve President Patrick Harker indicated that interest rate cuts are expected but emphasised that no immediate action is warranted due to persistent uncertainty in the economic outlook.
What’s on the horizon?
Domestically, attention will focus on household spending data, which may provide further insights into consumer behaviour amid rising cost pressures.
In the US, the release of nonfarm payrolls and the University of Michigan consumer sentiment index will be key indicators for market direction.
Additionally, earnings results from Constellation Brands (NYSE:STZ), Delta Air Lines (NYSE:DAL), Tilray and Walgreens Boots Alliance (NASDAQ:WBA) will provide further signals about the health of the corporate sector.
With mixed signals from global markets and an active economic calendar, the Australian market is likely set for a dynamic session today.