A rebound in technology stocks and progress toward ending the longest government shutdown in United States history have provided a tailwind to push Australian shares higher on Tuesday.
The S&P/ASX 200 index should begin up 0.5% at 10 am AEDT (11 pm GMT Monday), based on the December share price index contract last trading on the Australian Securities Exchange (ASX) 45 points above its previous settlement at 8,893.
Interest will be high in the first quarter trading update from Commonwealth Bank of Australia (ASX: CBA), whose price has eased since June from record highs, which made Australia’s biggest company also the world’s most expensive bank.
The positive tone was set on Wall Street where the three major price barometers closed strongly firmer on Monday (Tuesday AEDT) due to large price rises by artificial intelligence (AI) stocks and signs the Washington government closure may be ending.
The S&P 500 jumped 1.5%, the Dow Jones Industrial Average added 0.8% but the biggest jump was reserved for the Nasdaq Composite, which soared 2.3%.
Hopes of an end to the shutdown rose when a deal reinstating federal funding cleared a Senate hurdle on Sunday but Congress approval was still needed.
Northlight Asset Management Chief Investment Officer Chris Zaccarelli said the shutdown was continuing a lot longer than people had expected.
“There were concerns around the economy, about flights potentially being cancelled and having a wider impact to the economy," he was quoted in a Reuters story as saying.
Heavyweight tech stocks like the world’s most valuable company Nvidia, Tesla and Palantir bounced back from a sell-off.
"This is a rebound after being slightly oversold last week. It's another example of the "buy the dip" mantra really acting quickly in the tech and AI space," Baird Investment Strategy Analyst Ross Mayfield said.
The Australian market began the new week strongly on Monday with the S&P/ASX 200 climbing 0.75% as nine of the eleven sectors finished higher, led by technology stocks.
Other stocks to watch today include Coles Group (ASX: COL) which is holding its annual general meeting.
In fixed interest markets, yields in Australian Government bonds continued to rise with rates on two year paper gaining 1.45% to 3.628% and 10 year rates adding 0.51% to 4.372%.
