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Stocks rose Friday as Treasury yields eased from their recent highs and investors weighed the cumulative impact from Fed hikes already implemented and digested last week’s comments from the central bank.
That saw the S&P 500 jump 1.6 per cent on Friday and 1.9 per cent for the week for its first winning week in the last four.
Big gains for tech giants like Apple helped drive the Nasdaq composite to an even bigger gain of 1.97 per cent and a smaller 1.49 per cent rise for the week. The Dow rose 1.17 per cent on the day and 1.47 per cent for the week.
Of note the yield on benchmark 10-year Treasury note dipped below the 4 per cent threshold. Traders have been watching 4 per cent as the key level on the 10-year that could trigger another down move in stocks.
The US (and Australian) earnings season are all but over and ahead lies the US February jobs data on Friday and the US February inflation report tomorrow week. And in Australia this week the RBA is expected to lift the cash rate by 0.25 per cent to 3.6 per cent, but some economists say that should be it for the time being.
On the macro front, China has set a growth target of “around 5 per cent” for 2023 as Beijing seeks to revive investor confidence after the damage wrought by President Xi draconian zero-Covid regime last year. And the country’s military spending will grow at its fastest pace in four years in 2023 and take up a larger share of the economy, underscoring Beijing’s reweighting towards security over development.
On the IPO front, technology groups that have recently listed in the US burnt through more than $12bn of cash in 2022, with dozens of companies now facing difficult questions over how to raise more funds after their share prices tumbled. High-growth, lossmaking groups dominated the market for initial public offerings in 2020 and 2021, with 150 tech groups raising at least $100m each in the period, according to Dealogic data. As the proceeds from the dealmaking frenzy start to run low, however, many face a choice between expensive capital raises, extreme cost cutting, or takeover by private equity groups and larger rivals.
On Friday, all S&P 500 sectors closed higher. Technology, Consumer Discretionary, Utilities and Real Estate all closed higher by more than 1.5 per cent
Futures
The SPI futures are pointing to a 0.9 per cent gain.
Currency
One Australian dollar at 7:30 AM is buying at 67.46 US cents.
Commodities
Iron ore futures are pointing to a 1.3 per cent fall.
Gold added 0.8 per cent. Silver gained 1.6 per cent. Copper lost 0.2 per cent and oil was up 1.9 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE added 0.04 per cent, Frankfurt gained 1.6 per cent while Paris closed 0.9 per cent higher.
In Asian markets, Tokyo’s Nikkei gained 1.6 per cent, Hong Kong’s Hang Seng added 0.7 per cent while China’s Shanghai Composite closed 0.5 per cent higher.
On Friday, the Australian sharemarket closed 0.4 per cent higher at 7283.57.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
