ASX to rise as Wall Street gains after U.S. Fed rate hike

May 5, 2022 - 3 weeks ago
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The Australian sharemarket is expected to open higher on Thursday as investors were in a bullish mood on Wall Street Wednesday, scoring their biggest one-day gain since 2020 after the U.S. Federal Reserve delivered a widely expected interest-rate hike.

The ASX futures added +36 points or +0.5% to 7,308, while our local currency, the Australian Dollar, is currently buying US$0.7260 (as of writing).

The U.S. Federal Reserve hiked interest rates by 50 basis points, a move not seen since Alan Greenspan was U.S. Fed chairman back in 2000.

U.S. Fed Chair Jerome Powell said 50-basis point increases “should be on the table at the next couple of meetings,” but added that a three-quarter point rise increase “is not something the committee is actively considering.”

Friday’s more closely watched Non-Farm Payrolls count from the Bureau of Labor Statistics is expected to show a growth of 400,000 jobs added for April and a decline in the unemployment rate to 3.5%.

At the finishing bell, on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average gained +932.27 points, or +2.8%, to 34,061.06, marking its biggest one-day gain since November 2020.

The broad-based Standard & Poor’s 500 Index advanced +124.69 points, or +3%, to 4,300.17 for its best day since May 2020, while the rich-tech Nasdaq Composite Index added +401.10 points, or +3.2%, to 12,964.86.

All three major U.S. indexes had been down earlier in the day.

The US Dollar Index (US DXY), which tracks the greenback against a basket of its peers, tumbled by -0.96% from 103.50 to 102.52, while the yield on 10-year US Treasury notes lost 1.33% to 2.919%. Yields rise as bond prices fall.

Precious metals shine, with spot gold adding +2.1% to $1,902 and silver gaining +3.2% to $23.24.

Global oil benchmark Brent crude was trading at $110.74, up +5.2%, while U.S. benchmark West Texas Intermediate (WTI) was at $108.36 – a +5.6% gain.

Meanwhile, cryptocurrencies Bitcoin, the world’s largest cryptocurrency by market value, jumped by +5.6% and is trading at US$39,600.00 (as of writing).

Based on the daily technical assessment of the S&P/ASX 200 (XJO), a firmer opening is foreseen, with the intraday resistance assessed at 7,365 minor, with 7,400-15 located above. Reassess from there.

Assessing the downside, support is located at 7,310 minor, with 7,270 viewed beneath. Reassess from there.

Daily outlook on the benchmark S&P/ASX 200

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