Australia’s sharemarket is set to open higher after Wall Street held close to record levels, while falling oil prices eased some pressure on investors. ASX 200 futures pointed to a rise of 24 points, or 0.3 per cent, following a 0.3 per cent gain on Tuesday.
The Australian dollar was trading at US71.12 cents. In New York, the S&P 500 added 0.1 per cent and remained 0.4 per cent below the record high reached last month.
The Nasdaq Composite rose 0.4 per cent to another record, while the Dow Jones Industrial Average fell 168 points, or 0.3 per cent, in mid-afternoon trading. Energy and financial stocks were among the weaker performers.
Oil prices initially slipped more sharply, with Brent crude briefly falling below US$98 a barrel. The benchmark later pared its decline to trade at US$99.66.
Brent remains below the nearly US$110 reached last week, but is still well above the US$72 level recorded before the war with Iran began. Prices have continued to move sharply as markets assess when crude will again be able to flow freely from the Middle East to customers around the world.
US equities have remained resilient despite the higher oil price and uncertainty over whether artificial intelligence stocks have risen too far. Analysts expect companies in the S&P 500 to report aggregate profit growth of almost 29 per cent for the third quarter compared with a year earlier, according to FactSet.
If that forecast is met, it would mark the third consecutive quarter in which earnings growth exceeded 25 per cent. Corporate profits are closely followed by investors because share prices tend to track their performance over the longer term.
AutoZone was one of the strongest performers, climbing 6.1 per cent after the retailer reported better-than-expected quarterly profit, despite falling short of revenue forecasts. Chief executive Phil Daniele said the company had faced “a difficult selling environment” during the first two months of the quarter, but conditions had improved and it was “well positioned for sales growth” in the coming financial year.
Recreational vehicle manufacturer Thor Industries rose 5.1 per cent after also exceeding profit expectations. Its chief executive, Bob Martin, said expensive fuel, high interest rates and persistent inflation were putting pressure on customers’ budgets, while business “never reached the inflection point many in the industry expected” during the latest financial year.
On Holding gained 8.8 per cent after the Swiss sportswear company set financial targets for the coming years and approved a plan to buy back up to US$1 billion of its shares through 2029. Share buybacks return cash to investors and can increase a company’s earnings per share.
Oil producers were hit by the fall in crude prices, with ConocoPhillips down 1.7 per cent. Banks also weakened, extending their decline since the Federal Reserve raised its overnight interest rate last week for the first time in three years.
The narrowing gap between short-term and long-term interest rates can weigh on banks because it reduces the difference from which they generate profits. JPMorgan Chase fell 3.1 per cent and was among the biggest drags on the S&P 500.
The yield on the 10-year US Treasury note was little changed at 4.96 per cent. That remained well above the 3.97 per cent level recorded before the war with Iran began.
Markets across Europe and Asia were mostly higher. London’s FTSE 100 was an exception, slipping 0.3 per cent, while Hong Kong rose 0.2 per cent and Shanghai gained 0.1 per cent after Alibaba unveiled new artificial intelligence chip technology, including what it described as China’s most powerful AI chip.
The announcement came days before a meeting between Chinese and US leaders, where competition for leadership in artificial intelligence is expected to be a major issue.
