ASX expected to open higher as technology stocks drive Wall Street’s rally

This put pressure on commodity prices, including gold and iron ore.

BHP was down 1.9 percent to $47.93, Rio Tinto was down 1.6 percent to $123.43 and Fortescue Metals was down 1.4 percent to $21.92.

All major banks were higher, with ANZ leading the field, rising 1.7 percent to $25.59.

The IAG slipped 1.1 percent to $4.78 after warning that the Auckland floods last weekend and claiming inflation would reach its bottom line.

The Australian dollar was at 70.67 US cents, versus 71.42 US cents at the ASX close on Thursday.

Loading

On Wall Street, the S&P 500 rose 1.5 percent to continue its record week, the Dow fell 0.1 percent and the tech-heavy Nasdaq Composite rose 3.3 percent, while the Meta was up 23.3 percent jumped. But in after-hours trading, disappointing results from Apple, Alphabet and Amazon weighed on sentiment.

Meta jumped after reporting better-than-expected earnings for the latest quarter and said it expects to spend less this year than previously forecast. While the latest earnings fell short of expectations, Facebook’s parent company also announced a $40 billion ($56 billion) share buyback program.

Equities have already rallied at the start of the year on hopes that the US Federal Reserve may soon halt its rate hikes. Such hikes help stamp out inflation, but they also hurt the economy and investment prices.

A day earlier, stocks and bonds rose after Fed Chair Jerome Powell said the central bank was finally seeing progress in its fight against inflation. Markets took this as a sign that a break might indeed be imminent, with investors even increasing bets on rate cuts later this year. Rate cuts act like steroids on the markets, boosting prices and supporting the economy.

That’s despite Powell saying Wednesday that a few more rate hikes will likely be appropriate to push inflation toward the Fed’s target. He also said he foresees no rate cuts in 2023 and again vowed to “stay the course until the job is done” to fight inflation.

Thursday’s rally swept across the Atlantic, where markets rose after central banks for Europe and the UK also hiked interest rates to quell inflation.

The European Central Bank raised interest rates by 0.5 percentage points and announced another interest rate for next month. The Bank of England also raised interest rates by half a percentage point and said it saw signs that inflation had turned the corner, but stressed it was too early to declare victory over inflation.

European stocks rallied, with Germany’s DAX returning 2.2 percent. The FTSE 100 in London rose 0.8 percent.

Loading

Wall Street will closely monitor Friday’s US jobs report, where economists expect hiring numbers to slow. The labor market has remained broadly resilient, even in the face of the Fed’s rapid rate hikes over the past year.

AAP, AP

The Market Recap Newsletter is a summary of the trading day. Get it every useday afternoon.