Australian shares are set to snap an eight-session losing streak on Friday, with futures pointing to a strong rebound following a surge on Wall Street driven by robust earnings and resilient United States economic data.
ASX 200 futures were up 127 points, or 1.5%, to 8,795, indicating a positive open, after the S&P/ASX 200 Index closed down 21.2 points, or 0.2%, at 8,665.8 in the previous session, despite eight of the 11 sectors finishing in positive territory.
Investor sentiment improved after U.S. equities rallied to fresh record highs. The Dow added 1.6%, while the S&P 500 and the Nasdaq Composite gained 1% and 0.9%, respectively.
Wall Street’s gains were supported by a strong performance from industrial giant Caterpillar. Shares in the company surged 9.9% after it reported better-than-expected quarterly earnings and raised its long-term sales outlook, reinforcing confidence in global growth.
Further underpinning the rally was data showing the U.S. gross domestic product (GDP) expanded at an annualised rate of 2.0% in the first quarter, with a notable contribution from ongoing investment in artificial intelligence.
Performance among mega-cap technology stocks was mixed. Alphabet jumped 10% after delivering strong quarterly results, while Meta Platforms dropped 8.6% as investors reacted to its plans for increased spending on artificial intelligence.
Apple ended the session 0.4% higher, trimming earlier gains, before slipping in extended trading following its earnings release.
Locally, attention will turn to a series of key corporate earnings updates. ANZ is scheduled to report its half-year results on Friday, alongside earnings from Coles Group and ResMed.
On the economic front, final manufacturing data from S&P Global highlighted ongoing pressures within the sector.
The release stated: "Australian manufacturers reported severe price and supply disruption due to the war in the Middle East during April.
"Higher fuel prices resulted in the rate of input cost inflation quickening to the fastest in over four years, while disruption to international freight caused suppliers' delivery times to lengthen to the largest degree since July 2022.
"There was also some evidence of safety stock building leading to increases in purchasing activity and stocks of inputs, despite sustained reductions in workloads.
"The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Managers' Index™ (PMI®) moved back above the 50.0 no-change mark in April, posting 51.3 from a reading of 49.8 in March."
Investors will also be watching the release of first-quarter producer price index (PPI) data at 11.30 am AEST (1:30 am GMT) for further insight into inflation trends.
On the bond markets, Australian government yields were little changed, with the 10-year yield edging up 0.1% to 5.02%, while the 2-year yield held steady at 4.722%.
