ASX set to rise as Wall Street jumps; Honda-Nissan merger called off

US stocks rallied to the brink of a record after more companies reported fatter profits than expected. Wall Street mostly yawned, again, at the latest announcement on tariffs by President Donald Trump, which may not take full effect for at least several weeks.

The S&P 500 climbed 1 per cent to pull within 0.1 per cent of its all-time high set last month. The Dow Jones gained 342 points, or 0.8 per cent, and the Nasdaq composite jumped 1.5 per cent.

Wall Street’s benchmark S&P 500 had its sixth straight winning week.Credit: Reuters

The Australian sharemarket is set to advance, with futures at 4.51am AEDT pointing to a rise of 82 points, or 1 per cent at the open. The ASX added 0.1 per cent on Thursday.

MGM Resorts International leaped to one of the market’s biggest gains, 17.5 per cent, after reporting stronger profit for the latest quarter than analysts expected. It cited growth in China and said trends are looking up for its Las Vegas and North American digital businesses.

Other companies reporting better profit than expected included GE HealthCare Technologies, which rose 8.8 per cent, Molson Coors Beverage, which gained 9.5 per cent, and Robinhood Markets, which jumped 14.1 per cent.

Such reports, along with a remarkably solid US economy, have kept US stocks near their records. A report on Thursday said fewer US workers applied for unemployment benefits last week, the latest signal of a firm job market.

That’s even though many downward forces are weighing on stock prices.

Chief among them are worries about stubbornly high inflation. A report said inflation at the wholesale level was hotter than economists expected last month, following a similar report from the day before on inflation that US consumers are feeling.

Tariffs could push up inflation even further. And Trump on Thursday rolled out his plan to increase US tariffs on imports from other countries that will be customised, based in part on how much tax each country charges on US goods.

While economists warn about the pain such tariffs can create, financial markets have increasingly taken the threats in stride. Belief is strong that Trump is using tough talk to drive negotiations, but he may not fully go through with it in order to avoid damaging the US stock market and economy.

It could take weeks or a few months to complete the necessary reviews for the tariffs announced on Thursday, according to a senior White House official who insisted on anonymity to preview the details on a call with reporters. That implies plenty of time for negotiations that could ease the ultimate impact.

Of course, Wall Street’s belief that the stock market is serving as a guardrail hemming in Trump may prove dangerous. If the stock market keeps gliding through each escalating threat, it could embolden Trump to make even bigger moves.

But, for now at least, Trump may be “boxed in” a bit following the high inflation figures that have hit this week, according to Thierry Wizman, a strategist at Macquarie.

Trump has already shown he can quickly pull back on threats, like when he put a 30-day pause on 25 per cent tariffs he had announced for all imports from Canada and Mexico.

Still, Trump followed through on a 10 per cent tariff on Chinese products. GE HealthCare said Thursday it took those tariffs into account when it drew up its forecasts for profit and other financial measures in 2025.

On Wall Street, Deere & Co. fell 2.2 per cent after reporting drops in its revenue and profit for the latest quarter. The farm equipment manufacturer said it was focused on reducing inventory amidst the “uncertain market conditions” its customers were facing.

Reddit, the online message board, dropped 5.3 per cent even as it handily outdistanced Wall Street’s fourth quarter sales and profit targets.

Cisco Systems gained 2.1 per cent after reporting stronger profit for the latest quarter than analysts expected. It cited strength for a wide range of its products, including for artificial-intelligence infrastructure.

All told, the S&P 500 rose 63.10 points to 6,115.07. Its all-time high is 6,118.71, set on Jan. 23. The Dow Jones Industrial Average rose 342.87 to 44,711.43, and the Nasdaq composite jumped 295.69 to 19,945.64.

In the bond market, Treasury yields eased. While hotter-than-expected inflation data typically sends yields higher, economists saw some encouraging nuggets underneath the surface in Thursday’s report. Easier health care services costs, for example, could end up helping to pull a different measure of inflation lower, one that the Federal Reserve considers a better measuring stick than the consumer price or producer price indexes.

The yield on the 10-year Treasury fell to 4.53 per cent from 4.63 per cent.

Besides squeezing tighter on US households’ budgets, stubbornly high inflation is likely to keep the Federal Reserve on hold for a while when it comes to providing relief to Americans through lower interest rates.

The Fed had cut its main interest rate sharply from September through the end of last year, intending to make borrowing cheaper, help the economy and boost prices for stocks, bonds and other investments. But the Fed warned at the end of 2024 it may not cut rates by as much in 2025 because of worries about inflation staying stubbornly high. Its goal is to keep inflation at 2 per cent, and lower rates can give inflation more fuel.

In stock markets abroad, indexes were mixed across Europe and Asia. Nissan also announced Thursday it was dropping the talks it had started in December with Japanese rival Honda for a business integration.

AP

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