Australian Stocks Set to Rise Following Record High for S&P 500

Highlights: 

• Wall Street's mixed session points to a positive local market session. 
• S&P 500 hits a record high driven by healthcare and banking sectors. 
• Oil prices slip following Trump’s comments on OPEC, impacting commodities. 

Australian stocks are expected to experience an uptick today, spurred by a strong performance from Wall Street. The ASX futures were up 26 points, or 0.3%, to 8,373 at 7:30am AEDT, indicating a positive start to the day. The S&P 500 index, a key benchmark for US markets, gained 0.5%, setting a new record high of 6,103 points. The Dow Jones Industrial Average climbed 408 points, or 0.9%, while the Nasdaq Composite increased by 0.2%. These gains were mainly led by healthcare and banking stocks, both of which provided significant boosts to the overall market performance. 

The strength in the S&P 500 can be attributed to a solid performance in the healthcare and banking sectors. Among corporate earnings, GE Aerospace experienced a notable surge, rising 6.6% after raising its profit forecast for 2025. In contrast, American Airlines faced a challenging session, falling 8.7% due to disappointing profit guidance. The tech sector, which has faced challenges in recent weeks, was further pressured by a weak outlook from South Korea's SK Hynix, which caused global chipmakers to face additional pressure. 

At the same time, the global political landscape continued to shape market movements. The newly elected US president made headlines with a virtual address at the World Economic Forum in Davos, Switzerland. His call for immediate cuts to interest rates and pressure on Saudi Arabia and OPEC to lower crude oil prices marked a significant intervention in the market. These comments have the potential to influence both US and global economic policies moving forward. 

Meanwhile, European markets experienced a positive session, with gains in banking and real estate stocks. The pan-European FTSEurofirst 300 index rose by 0.4%, and the UK FTSE 100 index added 0.2%. However, the technology sector faced headwinds, with ASML dropping 4.4% and Puma plummeting 22.8% after missing profit expectations. 

In the commodities market, oil prices saw a decline following the US president’s comments urging OPEC to reduce crude costs. Brent crude fell by 0.9%, settling at US$78.29 per barrel, while West Texas Intermediate (WTI) dropped 1.1%, reaching US$74.62 per barrel. Meanwhile, base metals showed mixed results, with copper rising by 0.7%, but aluminium slipping by 0.2%. This shift in commodities is expected to influence sectors tied to global production and supply chains, particularly those tied to metals and oil. 

On the currency front, the Australian dollar strengthened against the US dollar, trading at 62.80 US cents at the close of US markets. Meanwhile, the US 10-year Treasury yield rose five basis points to 4.65%, reflecting ongoing uncertainty surrounding US monetary policies and economic direction. As investors digest these moves, the market’s focus will likely remain on the potential impact of President Trump's policies and their ability to shape global market trends in the coming months. 

With rising global equities and a positive lead from Wall Street, Australian shares are positioned to benefit, especially those in sectors tied to commodities and financials. Investors are advised to closely monitor developments surrounding the new administration's policies and their broader market implications. As the situation unfolds, it will be essential to assess the long-term effects on the global economy and how different sectors, including those within the Australian market, adapt to these changes. For now, the outlook for Australian stocks remains optimistic, with key sectors poised to capitalize on the positive momentum.