Record closes on Wall Street have positioned the Australian share market to finish the week on a high.
The Australian Securities Exchange (ASX) is set to open about 0.5% higher on Friday and could erase most of the previous day’s losses in the wake of all three United States benchmarks ending at the highest levels ever on Thursday (Friday AEST).
At the time of writing, the S&P/ASX 200 share price index December contract was quoted 41 points above the prior settlement at 8,838 points.
The impetus came from the United States, where an interest rate cut and the prospect of more reductions combined with NVIDIA taking a stake in Intel to boost U.S. stock prices.
The Dow Jones Industrial Average rose 0.3%, the S&P 500 added 0.5% and the Nasdaq Composite soared 0.9%.
The United States Federal Reserve (Fed) on Wednesday (Thursday ASET) reduced the target range for its benchmark lending rate by 25 basis points to between 4% and 4.25% and flagged a further easing of borrowing costs for the rest of this year.
“That rate cut was everything the market needed plus some more,” Burrell Stockbroking wealth adviser Adam Dight said.
He said “the most hated rally in living memory” confounded sceptics who questioned the sustainability of market highs, but monetary policy was being eased as inflation waned, and the focus turned to boosting the economy.
“It’s all about earnings and earnings on fire,” Dight said.
Fed Chair Jerome Powell on Wednesday signalled the softening jobs market was a priority and indicated more reductions could follow at upcoming policy meetings.
"We are looking for support for economic growth and justification of stretched valuations and the prospect of lower interest rates helps that," CFRA Research Chief Investment Strategist Sam Stovall was quoted in a Reuters story as saying.
The Australian market fell 0.8% on Thursday with the S&P/ASX 200 losing 73.3 points to 8,745.2.
Among the companies to watch are Latitude Group (ASX: LFS), whose shares trade ex dividend today, and Santos (ASX: STO), which plunged on Thursday in the wake of the withdrawal of a takeover bid.
In fixed interest markets, yields on Australian Government bonds continued to rise, with two-year rates putting on 0.09% to 3.367% and 10-year rates adding 0.05% to 4.244%.
