ASX set to rise as Wall Street rally continues
Unofficially, the Dow Jones Industrial Average rose 553.16 points, or 2.21 per cent, to 25,548.27, the S&P 500 gained 44.36 points, or 1.48 per cent, to 3,036.13 and the Nasdaq Composite added 72.14 points, or 0.77 per cent, to 9,412.36.
It sets up the ASX for a positive open, with futures at 6am AEST pointing to a gain of 42 points, or 0.7 per cent, at the open. On Wednesday, the ASX slid by 0.1 per cent.
“It’s all about liquidity and the hopes that the economy will eventually do well,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The rally will continue, but I don’t think it will continue without pullbacks,” he said, noting that weak second-quarter earnings could give investors a “reality check.”
Tech-related shares underperformed the broader market on Wednesday after leading the recent rally.
But amid the recent gains, US tensions with China have cast a cloud on markets.
President Donald Trump said Tuesday that Washington would announce its response to China’s planned national security legislation on Hong Kong before the end of the week. US Secretary of State Mike Pompeo said Wednesday that Hong Kong no longer warrants special treatment under US law as it did when it was under British rule, potentially a big blow to its status as a major financial hub.
Tech stock are among the most sensitive to Chinese growth, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.
“If the market is going to go higher from here, you’re going to have to have broader participation, but you are going to need those large-cap tech companies to be along for the ride, because they make up such a large portion of the benchmark,” Samana said.