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The share market was primed for its highest open since the first week of the year after commodity prices rallied and US investors bought some of last quarter’s worst-performing stocks.
Elon Musk’s purchase of a stake in Twitter fuelled a strong rebound in US tech stocks. Meanwhile, on commodity markets, iron ore, crude oil and copper advanced.
ASX futures climbed 50 points or 0.67 per cent, indicating the local market will open at its strongest since January 5. The Reserve Bank meets today and is expected to leave its key policy settings on hold.
Wall Street
US investors piled into beaten-up growth stocks after Musk’s purchase of a 9.2 per cent holding in Twitter underlined potential value in social media and other out-of-favour pockets of the market.
The Nasdaq Composite surged 271 points or 1.9 per cent. The broader S&P 500 gained 37 points or 0.81 per cent. The Dow Jones Industrial Average trailled with a rise of 104 points or 0.3 per cent.
Twitter jumped 27.12 per cent. Facebook owner Meta Platforms put on 4.02 per cent, Snap 5.22 per cent and Pinterest 10.44 per cent.
Musk’s Tesla advanced 5.61 per cent on record electric vehicle delivery figures. Apple, Alphabet and Amazon all gained at least 2 per cent.
“Because tech really took it on the chin in the first quarter, it ends up being sort of a relief rally for tech at this point as well as for the other growth-oriented sectors,” Sam Stovall, CFRA chief investment strategist, said. “The Nasdaq is obviously leading the way.”
Growth stocks under-performed last quarter as investors rotated out of stocks expected to fare worst as borrowing costs rise. The Nasdaq Composite slumped briefly into a bear market, defined as a close more than 20 per cent below a previous peak.
US-listed Chinese stocks, another out-of-favour corner of the market, also rallied. Stocks rose after China softened its resistance to confidentiality rules that fuelled a dispute with Washington. US regulators threatened to delist Chinese companies that did not meet US audit requirements.
Financial stocks retreated as bond markets continued to flash a recession signal. The two- and ten-year yields remained inverted.
Defensive stocks dragged as investors favoured companies with more potential upside. Utilities, health and consumer staples were among the laggards.
Australian outlook
The S&P/ASX 200 has this year’s high-point in its sights after Wall Street, key commodities and the dollar rallied overnight. The Australian benchmark ended yesterday within 80 points of this year’s strongest close and should get nearer this session.
How near will depend on the reaction to today’s RBA meeting. The Reserve Bank meets this morning and will release an updated policy statement at 2.30 pm AEST. While the cash rate is expected to stay at a record low 0.1 per cent, the bank is under pressure to lay the groundwork for increases later in the year.
Many economists expect the bank to raise in June, after the federal election. Markets are currently pricing in a 200-basis point increase by year-end.
Commodity gains helped light a fire under the dollar. The Aussie climbed 0.83 per cent to 75.45 US cents.
Growth sectors look likely to lead this session, reflecting moves in the US. The three US sectors associated with Big Tech (I.T., consumer discretionary, communication services) led with gains of 1.9-2.3 per cent.
Energy finished narrowly positive, up 0.07 per cent as US crude regained US$100 a barrel. BHP and Rio Tinto declined as the materials sector finished little changed.
Financials loom as a possible drag after falling 0.48 per cent in the US. Defensive havens also retreated.
Chinese markets remain closed today for a public holiday. Back home, March construction figures are due at 8.30 am AEST.
IPOs: Microba Life Sciences is set to debut at 10.30 am AEST. The company is focused on developing therapeutics for chronic diseases using technology for measuring the human gut microbiome.
Commodities
Iron ore regained US$160 a tonne as buyers anticipated stronger government support for the economy. The spot price for ore landed in China rose US$2.02 or 1.3 per cent to US$162 a tonne.
BHP‘s US and UK listings both reversed 0.66 per cent. Rio Tinto shed 1.57 per cent in the US and 1.49 per cent in the UK.
US oil climbed 4 per cent to US$103.28 a barrel after Russian atrocities in Ukraine fuelled calls for stronger sanctions against Moscow from the European Union. Brent crude settled US$3.14 or 3 per cent ahead at US$107.53 a barrel.
Copper rallied in thin trade on the London Metal Exchange while Chinese markets were closed for a public holiday. Benchmark copper climbed 1.1 per cent to US$10,451.75 a tonne. Zinc gained 0.3 per cent. Nickel was flat. Aluminium eased 0.2 per cent, lead 1.3 per cent and tin 1.9 per cent.
Gold rebounded as the threat of more sanctions against Russia added to inflation worries. Metal for June delivery settled US$10.30 or 0.5 per cent ahead at US$1,934 an ounce. The NYSE Arca Gold Bugs Index eased 0.78 per cent.
