Bruised from the biggest market drop in more than three months, Australian equity investors can look forward to some respite on Tuesday with the market benchmark set to inch higher at the opening.
Buoyed by record closes on two of the major United States indices on Monday (Tuesday AEST), the S&P/ASX 200 should rise by 0.13%, according to futures trading on the Australian Securities Exchange (ASX).
The drivers of a strong start at 10 am AEST (12 pm GMT) are new highs reached by the S&P 500 and Nasdaq Composite indices as companies reporting quarterly earnings this week, including Google’s parent Alphabet, rose ahead of their results.
At the time of writing the S&P/ASX 200 index September share price index contract was trading 412 points above the prior settlement at 8,660.
However this may not be enough to repair the damage of the Australian market’s biggest single-day drop since 9 April on Monday when the S&P/ASX 200 finished 1% lower at 8,668.
The S&P 500 and the Nasdaq were lifted by Alphabet and other U.S. technology giants strengthening ahead of earnings reports this week, rising 0.1% to 6,305.6 and 0.4% to 20,974.2 respectively, but the Dow Jones Industrial Average shed 0.04%.
Analysts on average expected S&P 500 companies to report a 6.7% increase in earnings for the second quarter, driven mostly by large tech stocks, according to a Reuters story.
"So far, companies that have reported have, in general, met or beat guidance from the prior quarter, and we haven't seen any degradation either in corporate profits or consumer spending," U.S. Bank Wealth Management National Investment Strategist Tom Hainlin was quoted as saying.
In economic news today, the Reserve Bank (RBA) Board released the minutes of the July 7-8 monetary policy meeting at which interest rates were left on hold amid speculation that the central bank will ease monetary policy next month.
In Australian fixed interest markets, the yield curve steepened as Australian 10-year Government bond rates rose 0.16% to 4.307% while two-year rates dropped 0.21% to 3.316%.
