Australian shares are expected to adopt tunnel vision to open higher on Wednesday despite diverse signals from overseas, with banks likely to be in focus today.
The SP/ASX 200 index is poised to begin 0.8% above the previous close as investors assess information from a range of sources, including Wall Street, where the stock benchmarks ended mixed.
Australian Securities Exchange (ASX) futures trading was quoting the S&P/ASX 200 December share price index 74 points above the previous settlement at 8,994 points.
A key event will be the annual general meeting of Commonwealth Bank of Australia (ASX: CBA), where comments from Australia’s largest company may be significant for the direction of the banking sector and overall market.
Other banks to watch include Westpac (ASX: WBC), after the Australian Prudential Regulation Authority removed a $500 million capital charge, and Bank of Queensland (ASX: BOQ), which has announced its FY25 results.
Chief CommSec Economist Ryan Felsman said gold stocks boosted by record high bullion prices would support the ASX, but New York equities trading overnight provided a mixed backdrop for Australian trading.
Two of the three indices closed down on Tuesday (Wednesday) as investors weighed mainly strong quarterly results from the large American banks, comments from Federal Reserve Chair Jerome Powell and the ongoing U.S.-China trade war.
The Dow Jones Industrial Average rose 0.4% while the S&P 500 eased 0.2% and the Nasdaq Composite lost 0.8%.
Powell said the U.S. jobs market was mired in low-hiring, low-firing doldrums in September, but the overall "may be on a somewhat firmer trajectory than expected”.
President Donald Trump on Tuesday threatened to end trade with China in cooking oil in retaliation for Beijing refusing to buy U.S. soybeans.
Baird Private Wealth Management Investment Strategist Ross Mayfield said the market was “struggling with where this shakes out”.
"If the (Trump) administration feels like ramping up these tensions again, the market looks pretty expensive right now for that sort of fight, especially if 100% tariffs and other measures are back on the board,” Mayfield was quoted in a Reuters story as saying.
Felsman said gold and financials stocks could perform well on the ASX today, but this would be offset by weaker energy and other mining companies due to lower commodity prices.
“So a combination of trade tensions between the US and China, but also reasonably good bank results and comments from Fed Chair Powell (are) resulting in that mix backdrop for our local market today,” he said.
The Australian sharemarket had finished a little stronger on Tuesday with the S&P/ASX 200 adding 0.2% to 8,899.4 points.
In other news today, Reserve Bank (RBA) Assistant Governor (Economic) Sarah Hunter is scheduled to give a speech.
Australian Government bond yields rose at the short end with two-year rates gaining 0.26% to 3.443% but fell at the long end with 10-year rates losing 0.33% to 4.255%.
