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Australian shares are positioned to continue their upward momentum after US equities reached new heights, fueled by optimism that Federal Reserve policymakers have laid the groundwork for a smooth economic transition.
ASX Futures Show Positive Outlook
ASX futures indicated a rise of 31 points, or 0.4%, at 8 AM AEST. The S&P/ASX 200 Index recently achieved a record high for the fourth consecutive session on Thursday, briefly surpassing the 8200 mark for the first time. Market analysts are keenly observing whether investors will capitalize on this strength at the open or if some will take the opportunity to offload positions, suggesting a potential for profit-taking.
Chris Weston, head of research at Pepperstone, noted, “A daily close firmly above 8200 is the clear target.” This statement underscores the significance of maintaining momentum in the Australian market.
Currency and Bond Market Movements
The Australian dollar reached a peak for 2024 at US68.39¢, before last trading at US68.13¢. In the bond market, Australian government yields followed US Treasury trends higher, with the policy-sensitive three-year yield rising 4 basis points to 3.53%. The 10-year yield increased by 3 basis points, reaching 3.93%.
Wall Street's Record Performance
On Wall Street, significant gains were observed, with the Dow Jones Industrial Average (DJIA) closing up 1.3%, the S&P 500 increasing by 1.7%, and the Nasdaq Composite surging by 2.5%, driven by a rally in technology stocks. Both the S&P 500 and the Dow reset their respective record highs, with the S&P 500 closing at 5713.64—marking its first time above 5700—and the Dow topping 42,000 at 42,025.19.
This robust performance reflects a growing belief among investors that the Federal Reserve's recent monetary policy adjustments, including a substantial interest rate cut, will bolster economic activity.
Cryptocurrency and Commodity Reactions
In the cryptocurrency market, Bitcoin experienced a lift in value. In the commodities sector, gold prices approached an all-time high, while oil prices rallied by over 1% in response to expectations that the rate cuts in the US will stimulate both economic activity and energy demand.
Conclusion
As the Australian market gears up for the trading session, the positive sentiment from Wall Street and macroeconomic factors suggest a favorable environment for further gains. Investors will be closely watching for a sustained break above the 8200 level on the ASX 200, while developments in global markets, currency fluctuations, and commodity prices will continue to influence trading dynamics in the days ahead.
