The ASX is poised to open higher after Wall Street rose overnight, with fresh earnings reports offering a welcome distraction from ongoing international concerns.
US indices had their best trading session in over a month as each of the main three closed comfortably in the green.
Crude oil prices tumbled, spot gold retreated slightly, and iron ore fell as the International Monetary Fund (IMF) slashed its global forecast for 2022.
ASX futures rose 48 points or 0.6 per cent. The S&P/ASX 200 climbed yesterday to its highest close since early January.
A round of positive earnings reports saw some of the biggest players on the market surge, including Johnson & Johnson, which advanced 3.1 per cent to its second record close in three sessions. The drugmaker’s profit exceeded market expectations and bolstered its dividend payout.
The tech-heavy Nasdaq tacked on 287 points or 2.15 per cent to reach 13,619 points. The Dow Jones gained 499 points or 1.45 per cent, and the S&P 500 gained 70 points or 1.61 per cent.
This comes even as the IMF downgraded its growth forecast for 2022 by 0.8 per cent to 3.6 per cent, citing Russia’s invasion of Ukraine and rising inflation.
Investors were happy to look past the IMF news as company earnings continued to outperform expectations. Of the first 49 companies in the S&P 500 index to report quarterly earnings, 79.6 per cent have exceeded profit estimates, according to Refinitiv data. Typically, 66 per cent beat estimates.
“It certainly feels like every earnings season, especially since March 2020, is more important than the next, but particularly given where we sit in the economic cycle, the Fed’s rate hike cycle, and the elevated inflation backdrop,” Max Grinacoff, an equity derivatives strategist at BNP Paribas, told Reuters.
International Business Machines gained 2.4 per cent during regular trading hours and another 1.8 per cent after market close.
Consumer discretionary stocks were among the best performers overnight, including Wynn Resorts, Caesars Entertainment, and Penn National Gaming, which each ticked up between 4.9 per cent and 5.9 per cent.
Netflix, however, put a major red stain on the green session after it revealed its subscriber count dropped for the first time in 10 years.
The streaming company initially closed 3.2 per cent higher before nosediving 24 per cent after market close when it said it had lost 200,000 subscribers over the first quarter — well below its predictions that it would add 2.5 million subscribers.
Bond yields continued to edge high, with the US 30-year yield exceeding 3 per cent for the first time in three years during Tuesday’s session. The yield on 10-year Treasury Inflated-Protected Securities (TIPS) turned positive for the first time since March 2020.
Big tech stocks — except, of course, for Netflix — posted healthy gains, with Apple rising 1.41 per cent, Meta up 3.1 per cent, and Google owner Alphabet up 1.83 per cent.
Futures action so far suggests that despite slipping commodities and the IMF downgrade, the positive action on Wall Street will be enough to bring about a green open for the local sharemarket.
The energy sector was the only sector to close in the red on Wall Street, and with oil prices slipping, local energy plays could be a drag on the market.
Inversely, Wall Street’s tech rally will likely bode well for the ASX’s tech sector.
The health care industry will likely be impacted by a $20.05 billion takeover offer from private equity giant KKR & Co of Australia’s largest private hospital operator, Ramsay Health Care (RHC).
KKR is offering $88 a share for full control of Ramsay, representing a premium of almost 37 per cent on Ramsay’s last closing price of $64.39.
Australia’s 10-year bond yields are marginally lower than yesterday but still above 3 per cent.
The Australian dollar is up 0.45 per cent to 73.89 US cents.
Commodity prices slumped against a strong US dollar, which traded at a two-year high.
Brent crude prices tumbled over 5 per cent to just over US$107 a barrel. Similarly, West Texas Intermediate fell around 5.2 per cent to US$102.50 a barrel.
Gold is down 0.43 per cent to $1950.50, iron ore fell 2.6 per cent to US$149.85 per tonne, and copper fell 0.3 per cent to US$10,380 a tonne.