The Australian sharemarket is set to open higher after Wall Street rebounded, with remarks from Federal Reserve officials boosting speculation the US central bank will refrain from lifting rates further this year.
Oil climbed after Hamas’ surprise attack on Israel raised fears of a broader conflict.US stocks erased early losses as Fed Vice Chair Philip Jefferson said officials are in a position to “proceed carefully” after the recent rise in US Treasury yields. Earlier in the day, Fed Bank of Dallas President Lorie Logan said the recent surge in long-term US bond rates may mean less need for the central bank to tighten again. The Dow Jones Industrial Average rose 0.6 per cent to 33,613.32 as of 6am AEDT.
“The script has changed,” said Andrew Brenner at NatAlliance Securities. “The odds for another tightening have dropped dramatically since Friday.” US crude futures rose as much as 5.4 per cent on Monday. Defence company Lockheed Martin and energy producer Exxon Mobil rallied, while airlines fell. The latest Middle East conflict comes at a time of ongoing geopolitical concerns, with markets also facing a period of moderating global economic growth, according to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management“Against this backdrop, we continue to prefer fixed income to equities,” Marcelli noted. “We see a better risk-reward profile for fixed income, and we recommend investors consider buying high-quality bonds in the 5-10-year maturity range.
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