In a tale of two markets, Australian shares are set to open lower on Friday despite equities in New York rising to record levels overnight.
Based on futures trading on the Australian Securities Exchange (ASX), the S&P/ASX 200 share price index should start 0.04% below the previous close when trading resumes at 10 am (12 am GMT Thursday).
The S&P/ASX 200 share price index December contract was trading just four points below the prior settlement at 8,968 points, at the time of writing.
Wall Street's three main benchmarks posted minor gains to reach new highs on Thursday (Friday AEST), mainly due to strength in technology stocks as hopes stayed high for more interest rate cuts and despite the U.S. government remaining shut for a second day.
The Dow Jones Industrial Average put on 0.2%, the S&P 500 inched 0.1% forward, and the tech-heavy Nasdaq Composite gained 0.4%.
Burrell Stockbroking wealth adviser Adam Dight said the continued rally in U.S. stocks was frustrating investors who had missed it and did not know when to buy back in.
He said Wall Street had withstood end-of-quarter pension fund selling and was driving higher as jobs data this week confirmed expectations of more rate cuts this year, and the outlook for the next quarterly earnings reporting season was promising.
But the prospects for Australian shares were not as bright with the ASX expected to underperform the U.S. market due to lower earnings growth and the ASX 200 facing a “glass ceiling” around 9,000 points.
Clients were being advised to retain their exposure to gold producers and look to buy stocks with strong offshore earnings, and fund managers increasing funds under management.
Dight nominated ResMed (ASX: RMD), Block (ASX: SQ2), Pro Medicus (ASX: PME) and Pinnacle Investment Management Group (ASX: PNI).
“It’s been nice playing long gold because it’s offset all the losses in oil and gas,” he said.
The Australian market had climbed 1.1% to 8,945.9 on Thursday due to strength in health care companies and gold miners.
Among the stocks to watch today are AGL Energy (ASX: AGL), which holds its annual general meeting, and Myer (ASX: MYR), whose shares trade ex-dividend.
In fixed interest markets, yields fell on Australian Government bonds with two-year rates down 0.03% to 3.493% and 10-year rates off by 0.02% to 4.390%.
