ASX set for more gains after tech stocks push US market higher

The Australian sharemarket is set to extend Monday’s rally this morning after technology stocks drove gains again on Wall Street overnight ahead as US traders kicked off a data-packed week more optimistic that the Federal Reserve will cut interest rates in December.

ASX futures were up 36 points, or 0.4 per cent, at 8573 as of 6.19am AEDT, pointing towards gains when the market opens. The local bourse jumped 1.3 per cent on Monday, partially recovering from its weak patch last week. “I suspect with US rate cuts back in play, we may have seen a bit of a short-term low for our market,” IG Market analyst Tony Sycamore said after trading closed last night.

The Australian dollar traded at US64.62¢ as of 6.30am AEDT.

A rally in tech stocks has driven Wall Street higher overnight.Credit: Bloomberg

Major US stock indexes continued their ascent from Friday, with the S&P 500 rising 1.6 per cent, the Dow Jones Industrial Average up 0.7 per cent and the tech-heavy Nasdaq 100 jumping 2.6 per cent. Bitcoin posted modest gains after dropping earlier. Oil rose after swinging between small gains and losses as traders weighed the prospect of a Ukraine-Russia peace deal. Gold prices advanced.

Wall Street got a lift from rising hopes that the Fed will cut its main interest rate again at its next meeting, a move that could boost the world’s largest economy and investment prices.

The market also benefited from strength for stocks caught up in the artificial-intelligence frenzy. Alphabet, which has been getting praise for its newest Gemini AI model, rallied 5.5 per cent and was one of the strongest forces lifting the S&P 500. Nvidia rose 1.8 per cent.

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But the gains were a bit hesitant, and the S&P 500 rallied to a gain of 1 per cent only to halve it within the first 15 minutes of trading, before picking up momentum again.

Stocks have been swinging sharply, not just day to day but also hour to hour, in recent weeks as worries weigh about what the US central bank will do with interest rates and whether too much money is pouring into AI and creating a bubble. All the uncertainty is creating the biggest test for investors since an April sell-off, when President Donald Trump shocked the world with his “Liberation Day” tariffs.

Still, despite all the recent fear, the S&P 500 remains within 2.7 per cent of its record set last month.

“It’s reasonable to expect that stocks will experience periods of pressure from time to time, which, historically, is quite healthy for longer-term strength,” Anthony Saglimbene, Ameriprise chief market strategist, wrote in a note to investors.

Wall Street will likely remain shaky in the near term because of concerns about AI investments, the Fed and some consumer uncertainty, he wrote. But strong corporate earnings, continued AI innovation and holiday season spending will “set the stage” for good conditions to close the year.

Several more tests lie ahead for the market this week, though none loom quite as large as last week’s profit report from Nvidia or the delayed jobs report from the US government for September.

One of the biggest tests will come on Tuesday, when the US government will deliver data showing how bad inflation was at the wholesale level in September.

Economists expect it to show a 2.6 per cent rise from a year earlier, the same inflation rate as August. A higher-than-expected reading could deter the Fed from cutting its main interest rate in December for a third time this year because lower rates can worsen inflation. Some Fed officials have already argued against a December cut in part because inflation has stubbornly remained above their 2 per cent target.

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Traders are nevertheless betting on a 79 per cent probability that the Fed will cut rates next month, up from 71 per cent on Friday and from less than a coin flip’s chance a week ago, according to data from CME Group. Federal Reserve Governor Christopher Waller fuelled that optimism on Monday after indicating support for a rate cut next month. New York Fed President John Williams had a similar impact on the market on Friday after he said a near-term rate cut remains a possibility.

Wall Street will be closed on Thursday for the Thanksgiving holiday. A day later, it’s on to the rush of Black Friday and Cyber Monday.

US-listed shares of Danish drugmaker Novo Nordisk fell 5.8 per cent on Monday after it reported that its Alzheimer’s drug failed to slow progression of the disease in a trial.

Grindr dropped 9.3 per cent after saying it’s breaking off talks with a couple of investors who had offered to buy the company, which helps its gay users connect with each other. A special committee of the company’s board of directors said it had questions about the financing for the deal by the investors, who collectively own more than 60 per cent of Grindr’s stock.

Bitcoin, meanwhile, continued it sharp swings. It was sitting near $US88,700 after bouncing between $US82,000 and $US94,000 over the last week. It was near $US125,000 last month.

In other international markets, indexes were mixed in Europe following a mixed finish in Asia.

Hong Kong’s Hang Seng jumped 2 per cent for one of the world’s biggest moves. It got a boost from a 4.7 per cent leap for Alibaba, which has reported strong demand for its updated Qwen AI app. Alibaba is due to report earnings on Tuesday.

In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury eased to 4.04 per cent from 4.06 per cent late on Friday.

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