Australian share prices are set to rebound on Wednesday following a stronger night in the United States, with gold and financial companies likely to be most supported as the profit reporting season continues.
Woolworths (ASX: WOW), Flight Centre (ASX: FLT) and Domino’s Pizza (ASX: DMP) are among the companies scheduled to announce their results on the Australian Securities Exchange (ASX).
ASX futures trading indicates the main price benchmark will begin about 0.5% higher, with the S&P/ASX 200 September share price index (SPI) contract trading 47 points above the previous settlement at 8,942 at the time of writing.
A higher close on Wall Street on Tuesday (Wednesday AEST) has provided the impetus for the ASX to bounce back from price falls on Tuesday, with the main indices in New York finishing higher despite mounting concerns about central bank independence.
The Dow Jones Industrial Average added 0.3%, the S&P 500 put on 0.4% and the Nasdaq Composite rose 0.4%, buoyed by higher prices for Nvidia and Eli Lilly, and seemingly ignoring President Donald Trump's sacking of Federal Reserve Governor Lisa Cook.
U.S. Bank Wealth Management Head of Capital Market Research Bill Merz said that although the market was worried about Fed independence, it did not alter the direction of interest rates over the next six to 12 months.
“I think the writing has already been on the wall that we get easier monetary policy in the next six to 12 months," he was quoted as saying in a Reuters article.
Nvidia rose 1.1% ahead of its quarterly report to be issued late on Wednesday (Thursday AEST), which will show how the world's most valuable company is trading.
Chief CommSec Economist Ryan Felsman said gold and financial stocks should benefit from higher gold prices and strength in U.S. bonds overnight, while energy and iron ore miners may be weaker due to lower oil and iron ore prices.
Felsman said he also expected investors to overlook the monthly inflation data to be issued today, as the market was expecting another cut in interest rates in September after quarterly inflation data is issued.
He said the reporting season had delivered mixed results so far, with companies punished for disappointing the market and rewarded for beating expectations, as indicated by the rise in Coles (ASX: COL) shares yesterday.
“It's probably been in line with previous reporting seasons, but overall it's a little bit of a mixed backdrop. Perhaps it's a sign the economy is performing reasonably well but not shooting the lights out as evidenced by the economic data,” Felsman said.
The Australian market had eased on Tuesday with the S&P/ASX 200 Index losing 0.41% to 8,935.6 as eight of the 11 sectors finished lower.
In fixed interest markets, two-year Australian Government bond yields fell 0.15% to 3.348% while 10-year rates edged up by 0.02% to 4.316%.
