Wall Street rises as oil prices swing, ASX set to edge up
Stan Choe
US stocks are gaining ground following strong profit reports from BlackRock and other big companies and an update on the path of inflation.
The S&P 500 rose 0.4 per cent and was on track for a fourth gain in five days. The Dow Jones Industrial Average was up 175 points, or 0.3 per cent, in mid-afternoon trade, and the Nasdaq composite rose 0.6 per cent.
The Australian sharemarket is set to inch higher, with futures at 5.54am AEST pointing to a gain of 11 points, or 0.1 per cent, at the open. The ASX added 0.4 per cent on Wednesday. The Australian dollar is stronger at US70.12¢ at 5.11am AEST.
Investment giant BlackRock surged 6.5 per cent after the company behind some of the most popular investment funds reported stronger profit and revenue for the latest quarter than analysts expected. CEO Laurence Fink said its iShares funds topped $US6 trillion ($8.6 trillion) in assets under management during the quarter, roughly doubling in three years.
Bank of New York Mellon rose 3.7 per cent after adding to the spate of strong earnings reports from many of the biggest US banks a day earlier. Cintas climbed 4.1 per cent after the provider of office uniforms, restroom supplies and other products likewise delivered a better profit for the latest quarter than analysts forecast.
They helped offset a drop for Elevance Health, which fell 8.7 per cent even though it reported stronger profit and revenue than analysts expected.
Several big technology companies fell and checked gains elsewhere. Intel fell 5.5 per cent and Micron Technology slumped 7.4 per cent.
Expectations are high for US companies’ profit growth during the spring. They’ll need to beat them to justify the big moves their stock prices have made, with indexes near their records.
Another report showed inflation slowed last month. This one said inflation at the wholesale level slowed to 5.5 per cent from 6 per cent in May, and it was much better than the acceleration that economists expected.
The day before, a separate report said that inflation that US consumers are feeling was also not as bad as economists expected last month.
Such numbers take pressure off the Federal Reserve, which is considering raising interest rates. Higher rates would keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
Following the inflation report, traders see just a 10 per cent chance that the Fed will raise its main interest rate at its next meeting in a couple weeks. That’s down from the nearly 42 per cent probability they saw on Monday, before the inflation reports, according to data from CME Group.
Also helping to pull down expectations was a speech from John Williams, president of the New York Fed. He said that “there are encouraging reasons to expect that inflation has peaked and should edge down in coming quarters.”
That helped send the yield on the 10-year Treasury down to 4.55 per cent from 4.58 per cent late on Tuesday and from 4.62 per cent the day before.
Still, upward pressure on inflation remains because of the war with Iran, which has seen days of back-and-forth strikes by the United States and Iran across the Middle East.
Iran’s Revolutionary Guard threatened Wednesday to halt all energy exports from the Middle East because of the US military’s blockade to prevent tankers carrying Iranian oil from using the Strait of Hormuz.
“The export of oil and gas from the region will be either for everyone or for no one,” the Revolutionary Guard said.
Oil prices swung near their highest levels in a month because of the war with Iran. The price for a barrel of Brent crude briefly topped $US86 in the morning before falling back to $US84.33 per barrel, down 0.5 per cent from the day before.
In stock markets abroad, technology stocks helped lead the way as winners of the artificial-intelligence boom gathered more strength following several shaky weeks.
In Asia, South Korea’s Kospi index jumped 6.2 per cent. Its market is dominated by two huge tech companies, Samsung Electronics and SK Hynix, and the index has already had drops of 8.9 per cent, 7.9 per cent and 5.3 per cent so far this month.
In Amsterdam, ASML reported stronger revenue growth for the latest quarter than the bellwether of the chipmaking industry had forecast. CEO Christophe Fouquet said continuing progress in the AI boom has customers accelerating their expansions, and the maker of chipmaking machinery gave a forecast for revenue growth in the summer that topped analysts’ expectations.
The strength helped calm some of the worries that have sent AI-related stocks spinning recently. Chief among them is the possibility that their prices shot too high in the euphoria around AI. Worries have been rising that surging demand for AI chips and data centres may fizzle if they don’t produce enough profits and productivity to make all the investments worth it.
In China, stocks rose 1.4 per cent in Hong Kong but fell 0.3 per cent in Shanghai after the government said the world’s second-largest economy expanded at a 4.3 per cent annualised pace last quarter, down from the 5 per cent growth rate at the start of the year.
AP
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