A brighter start to the day for ASX as U.S. stocks close higher after Fed minutes

May 26, 2022 - 1 month ago
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The Australian sharemarket is poised to open higher for a second day as U.S. stocks on Wall Street end higher after the minutes from the last U.S. Federal Market Open Committee (FOMC) meeting on the 3-4 of May suggested the central bank won’t be any more hawkish in aggressively raising interest rates in the months to come.

The Australian SPI 200 futures contract was up +5 points, or +0.1%, at 7,149, while our local currency, the Australian dollar, is currently buying US$0.7088 (as of writing).

The modest gains came after the U.S. Federal Open Committee Meeting (FOMC) minutes revealed an agreement among Fed officials that inflation was “elevated, reflecting continued supply and demand imbalances, higher energy prices, and broader price pressures.”

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average rose for a fourth straight trading day, adding +191.66 points, or +0.6%, to 32,120.28.

The broad-based Standard & Poor’s 500 Index rose +37.25 points, or +0.9%, to 3,978.73, while the rich-tech Nasdaq Composite Index, finished higher, climbing +170.29 points, or +1.5%, to 11,434.74.

Wednesday’s rise came as Snap Inc rebounded +10.7% while Tesla gained +4.9%, while Twitter rose +3.9%, with post-market trading seeing the stock rally over +7% following news that Elon Musk had made a further commitment on his takeover bid.

The US dollar index (US DXY), which tracks the greenback against a basket of its peers, rebounded +0.4% to 102.10, while in the bond market, the yield on the benchmark 10-year Treasury note fell to 2.746% from 2.758% on Tuesday. It has declined for five of the past six trading sessions. Yields climb when bond prices decline.

Precious metals slipped as spot gold lost -0.8% to $1,850, and silver tumbled -0.64% to $21.90.

Crude prices rose, with global oil benchmark Brent crude adding +0.6% to $114.06, while the U.S. benchmark West Texas Intermediate (WTI) was at $110.40, a +0.8 gain.

Meanwhile, iron ore prices added +2.2% to US$133.40 a tonne, and cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, rose +0.2% and is trading at US$29,980.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a slightly firmer opening is foreseen, with the intraday resistance seen at 7,185 minor, with 7,210 located above. Reassess from there.

Assessing the downside, the support is located at 7,135 minor, with 7,075 viewed beneath. Reassess from there.

With the bearish trend still looming, it expects further downside pressure in the broader assessment, which could see a potential challenge of the region at 6,900-40 in the not-too-distant future. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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