Overnight, US markets surged on the back of record bank profits and easing inflation concerns, setting the stage for a positive opening for the ASX. These positive developments have significantly boosted investor confidence, suggesting a potential rally in the Australian market.
The Dow Jones Industrial Average gained 703.27 points, or 1.65%, to close at 43,221.55. The S&P 500 climbed 1.83% to 5,949.91, and the Nasdaq Composite rallied 2.45% to 19,511.23. It was the best day for all three major averages since Nov 6.
US Bank Earnings
Major US banks reported stellar earnings, driving market optimism. JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo all announced record or near-record profits, exceeding market expectations and boosting investor sentiment.
US Inflation Data
December’s US core CPI figures came in lower than anticipated, easing fears of persistent inflation. This positive development reduces the likelihood of further interest rate hikes by the Federal Reserve, providing further support to the market rally.
Commodity Markets
Commodity markets also saw positive movement. Brent crude oil prices rose by 2.1% to $US81.61 per barrel following the Israel-Hamas ceasefire. Bitcoin also surged, briefly topping $US100,000.
ASX Outlook – Unemployment and Rio Tinto
The Australian market is expected to open higher, following the positive global cues. The release of December’s labour force data, which may show a rise in unemployment to 4%, will be a key focus. Rio Tinto’s operational update, due today, will also be closely watched by investors. Meridian Energy experienced a 1.3% increase in retail sales volumes during the December quarter, despite mixed weather conditions and subdued demand impacting the New Zealand-based renewable energy producer.
ASX Day Ahead
The December labour force data will be crucial in understanding the current state of the Australian economy and potential inflationary pressures.
Overall, the global market trends suggest a positive start for the ASX. The combination of strong bank earnings and easing inflation concerns is providing a boost to investor confidence. However, market conditions can change rapidly, and investors should carefully assess the risks before making investment decisions.
