Australian shares are set to open higher on Wednesday, after a tech rally helped Wall Street bounce back and oil prices fell overnight.
- The ASX is poised to gain after adding half a percent on Tuesday
- Tech stocks boosted Wall Street, although Netflix shares fell 24 percent in after-hours trading
- Commodity prices are down against a strong US dollar and the IMF’s downgrade of global economic growth
ASX SPI 200 futures were up by 0.7 percent, to 7,583, by 06:35 am AEST.
The Australian dollar was up 0.4 percent at 73.75 US cents
Oil prices fell around 5 percent after the International Monetary Fund (IMF) slashed its growth forecast for 2022 by 0.8 percent, to 3.6 percent, based on Russia’s invasion of Ukraine and rising inflation.
Brent crude tumbled 5.2 percent, to $ US107.25 per barrel, while West Texas crude also fell about 5.2 percent, to $ US102.50 per barrel.
The commodity price slump came as the US dollar traded at a two-year high. Demand for commodities priced in US dollars can soften when a stronger greenback makes them more expensive for buyers using other currencies.
Iron ore fell 1.8 percent to $ 149.85 a tonne.
Spot gold was down 1.8 percent, selling for $ US1,950.80.
US Treasury yields continued to march to three-year highs on Tuesday, as investors prepared for the Federal Reserve to aggressively raise rates as it tries to stem soaring inflation. Meanwhile, 30-year yields tapped the 3 percent level.
Wall Street up on tech rally
The Dow Jones Industrial Average gained 1.45 percent, to close at 34,911.20. The S&P 500 added 1.61 percent to 4,462.21, and the Nasdaq Composite rose 2.15 percent to 13,619.66.
Shares of megacap companies – including Microsoft, Apple, and Amazon – rose even as Treasury yields extended a recent surge.
Johnson & Johnson advanced to a record high, before pulling back slightly, as its quarterly profit exceeded market expectations and it raised its dividend payout.
Strong quarterly earnings results continue to dominate market moves.
“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,” said Max Grinacoff , equity derivatives strategist at BNP Paribas.
“So it all comes down to whether corporate earnings will remain resilient in the face of what we have seen, year-to-date, geopolitically and with the US economic picture. It will be a true test.”
In after-hours trading, Netflix stocks dived after the global streaming giant reported losing subscribers for the first time in more than a decade and predicted more contraction in the second quarter.
In the first quarter, Netflix lost 200,000 subscribers, falling well short of its modest predictions that it would add 2.5 million subscribers.
Its decision to suspend service in Russia after it invaded Ukraine resulted in the loss of 700,000 members. The company’s stock plunged 24 percent after the bell.
In Europe, the pan-European STOXX 600 index lost 0.7 percent, Germany’s DAX lost 10.3 points, 0.07 percent, and Britain’s FTSE lost 0.2 percent.