ASX set to fall, Wall Street rebounds; Intel surges as Trump announces Apple deal; SpaceX declines again

Stocks rose on Wall Street on Thursday and erased most of their losses from a day earlier to notch weekly gains.

The market’s reversal was powered by sharp gains for big technology companies. The decline on Wednesday was driven by anticipation that the Federal Reserve will likely raise interest rates this year in an effort to fight inflation.

The S&P 500 rose 80.48 points, or 1.1 per cent, to 7,500.58. The Dow Jones Industrial Average rose 72.15 points, or 0.1 per cent, to 51,564.70. The Nasdaq composite surged 496.28 points, or 1.9 per cent, to 26,517.93. Every major index notched weekly gains.

The Australian sharemarket is set to fall, with futures at 6.05am AEST pointing to a loss of 51 points, or 0.6 per cent, at the open. The ASX lost 0.6 per cent on Thursday. The Australian dollar was trading at US70.10¢.

US markets will be closed Friday for Juneteenth.

Technology stocks had some of the biggest gains and the most influence on the broader market’s rise. Intel surged 10.6 per cent after President Donald Trump announced that the semiconductor giant will make chips for Apple in the US Other big semiconductor companies gained ground. Nvidia rose 3 per cent and Micron Technology jumped 8.7 per cent.

On the losing end, SpaceX fell for the second straight day since its ballyhooed debut on the US stock market last week. The Elon Musk-led rocket maker and AI company was down 3.6 per cent following a 4.9 per cent loss Wednesday.

Oil prices wavered after the United States and Iran signed an agreement to end their war and reopen the Strait of Hormuz to oil tanker traffic. Brent crude, the international standard, spent most of the day lower before settling 0.4 per cent higher at $US79.85 per barrel. US benchmark crude fell 0.2 per cent to $US75.85 per barrel.

Airlines had some of the bigger gains. American Airlines rose 3.7 per cent and United Airlines rose 2.1 per cent. Cruise line company Carnival jumped 3.2 per cent.

Energy companies lost ground. Exxon Mobil fell 2.1 per cent and Chevron fell 2.2 per cent.

Prices for crude oil are still above roughly $US70 per barrel from before the war, but are well below the $US100-plus price from a few weeks ago.

Higher oil prices have been weighing on markets throughout the US war with Iran. The current deal between the nations waives sanctions against Iran and allows it to sell its oil freely. It also opens up the Strait of Hormuz, where a fifth of the world’s oil supply is shipped.

“While investors are welcoming the agreement as a constructive step for geopolitical risk, uncertainty remains elevated around potential flare-ups, the pace of shipping normalisation, control of the waterway, the cost of access, and the path forward for Iran’s nuclear program.” said Adam Turnquist, chief technical strategist for LPL Financial, in a research note.

Rising energy costs have been putting more pressure on already hot inflation. The average price of gasoline in the US has dipped below $USUS4 a gallon, but is still 25 per cent higher from a year ago. Prices have been rising for a wide range of goods because of higher shipping costs.

Hotter inflation prompted the Federal Reserve to shift course from cutting its benchmark interest rate to likely raising rates by the end of the year. Lower interest rates can boost the economy by making borrowing easier for businesses and households, but it also tends to stoke inflation.

The Fed has been trying to balance its job of curbing inflation while supporting employment growth. The jobs market has remained relatively strong amid rising inflation, with low unemployment and solid job growth.

The central bank closed its two-day meeting on Wednesday by maintaining its benchmark interest rate at its current level. But it signalled that it might raise the rate at least once by December.

“This shift in the risk distribution helps explain why around half of the committee thought that an interest-rate hike this year might be needed,” said James McCann, senior economist at Edward Jones, in a research note.

The Fed’s stronger signal for an eventual rate hike prompted a jump in bond yields on Wednesday, but they eased on Thursday.

The yield on the 10-year Treasury fell to 4.45 per cent from 4.49 per cent late on Wednesday. The yield on 2-year Treasury, which more closely tracks action by the Fed, fell to 4.18 per cent from 4.20 per cent late Wednesday.

Markets were mixed in Europe after closing lower Asia.

AP

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