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The Australian sharemarket is set to open higher after Wall Street recovered from early losses, as the 10-year US Treasury yield pulled back from a 24-year high near 5.34 per cent. Oil prices surged, with Brent crude jumping more than US$4.
The Australian sharemarket is set to open higher, with futures pointing to a rise of 0.5 per cent after Wall Street recovered from early losses.
Bond Yields Ease Global Market Anxiety
The expected advance follows a rough session on Thursday when the ASX closed at a four-month low, falling 2 per cent and wiping $50 billion off the boards. The 10-year US Treasury yield retreated sharply after hitting a 24-year high near 5.34 per cent. It later pulled back to 5.23 per cent from 5.29 per cent late Wednesday. The reversal in bond trading helped Wall Street recover, with buyers stepping back into the bond market.
Comments from the Fed's Philip Jefferson suggested the central bank could be patient before raising rates again, further easing bond market anxiety. Bond markets had been anxious overnight as the US 10-year Treasury yield hit its highest level since 2002, extending a global sell-off that pushed borrowing costs sharply higher. Bond yields in Europe also moved higher, with French, Italian and UK borrowing costs rising as concerns about inflation and massive government debt weighed on markets.
The yield on the 10-year French government bond shot to nearly 4.95 per cent and then veered toward 4.80 per cent and back up to 4.90 per cent, a punishing swing for the bond market. On Wall Street, the S and P 500 rose 0.3 per cent and was on track to break a three-day losing streak. The Dow Jones Industrial Average was virtually unchanged in mid-afternoon trade and the Nasdaq composite was 0.3 per cent higher.
Wall Street Holds Steady Amid Sell-Off
European indexes tumbled, with London down 1.7 per cent, Paris down 1.6 per cent and Frankfurt down 1 per cent. High yields slow the economy by making borrowing more expensive and undercutting prices for stocks and other investments. Yields are rising due to worries about high inflation and oil prices, signals that the US economy remains solid, and governments spending much more than they bring in.
High yields can particularly hurt real-estate owners, with BXP sinking 1.6 per cent and Alexandria Real Estate Equities falling 2.2 per cent. Oil prices climbed again Thursday to keep pressure on inflation, with Brent crude leaping 4.3 per cent to 102.24 US dollars, up more than US$4, amid uncertainty about when the war with Iran will allow the global oil industry to return to normal. Further reports signalled the US economy is powering through its challenges.
Fewer US workers applied for unemployment benefits last week, and a separate report said US manufacturing growth continued in September. However, the Institute for Supply Management report showed increases in prices accelerated, potentially adding further pressure on inflation. Helping to counteract losses were gains for stocks benefiting from the artificial-intelligence boom. Micron Technology delivered a stronger profit report than analysts expected and said growth is strengthening.
AI Optimism Lifts Asian Markets
Micron's stock rose 1.7 per cent to bring its gain for the year to nearly 280 per cent. Nvidia added 1.6 per cent and was the strongest force lifting the S and P 500, while Applied Materials rose 3.8 per cent. Outside of tech, Accenture leaped 17 per cent after reporting stronger profit than analysts expected, with growth around the world from the Americas to Asia. In Asia, indexes did better thanks to AI optimism following Micron's profit report.
Japan's Nikkei 225 jumped 3.3 per cent and South Korea's Kospi climbed 1.9 per cent. In Australia, data centre operator Firmus has priced its IPO at $11 a share, aiming to raise $7.1 billion and valuing the company's equity at $30.6 billion, according to Reuters. With analysts estimating around $30 billion in debt, Firmus would have an implied enterprise value of roughly $60 billion.
Indicative investor demand is already above the deal size, with bookbuilding due to begin next week and the stock expected to start trading on the ASX on October 23. The Australian dollar is buying 69.29 US cents.
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abcnews:Live: ASX to rise as US bond yields recedeThis story was compiled and edited by the HeadTopics newsroom and HT AI from the reports above.
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