A strong bounce-back in Australian shares is expected on Tuesday, tracking the performance of Wall Street where technology stocks powered indices to new records.
The Australian Securities Exchange (ASX) should gain about 0.5% when trading begins at 10 am AEST (12 am GMT Monday), based on futures trading.
The S&P/ASX 200 share price index September contract was priced 41 points above the previous settlement at 8,889, at the time of writing.
The three major U.S. indices closed higher on Monday (Tuesday AEST) with the S&P 500 and the Nasdaq Composite closing at record highs as investors await the Federal Reserve Board's expected cut in interest rates this week.
The Dow Jones Industrial Average added 0.1%, the S&P 500 jumped 0.5% and the Nasdaq Composite gained 0.9%.
The market is pricing in a 25 basis point reduction by the Fed’s Open Market Committee on Wednesday (Thursday AEST).
BMO Family Office Chief Investment Officer Carol Schleif said the market was hoping for a “goldilocks scenario” where the jobs were weak enough to prompt the Fed to start a rate-cutting series.
“I think the markets will be disappointed if the Fed doesn’t give some hint that they intend to continue rate cuts,” Schleif said, according to a Reuters article.
U.S. markets were also boosted by strength in Tesla and Google parent Alphabet’s shares.
This augers well for the Australian share market, which had finished a little down on Monday with the S&P/ASX 200 losing 0.1% to 8,853.0.
Companies in focus today include New Hope (ASX: NHC), which has issued its full year results and Qantas (ASX: QAN), which trades ex-dividend, while Reserve Bank (RBA) Assistant Governor (Economic) Sarah Hunter delivers a speech.
In fixed interest markets, Australian Government bond yields fell with two-year rates easing 0.03% to 3.382% and 10-year rates losing 0.12% to 4.234%.
