Local stocks eye US boost

Corporate shareholder meetings will be in focus locally, after Wall Street rallied sharply on soft US wages data.

Corporate shareholder meetings were set to capture the local sharemarket’s focus. Picture: NCA Newswire/Gaye Gerard

The local sharemarket was poised to rebound on Monday, ahead of a week headlined by blue-chip shareholder meetings, after Wall Street rallied sharply on soft US wages data.

S&P/ASX 200 futures were pointing to a lift of 58 points, or 0.8 per cent, to 7037, at the close of offshore trade.

Oil stocks were set to remain in the spotlight, after the price of crude rebounded modestly on Friday night, but set its biggest weekly drop since March.

Brent crude ended up 0.6 per cent at $US84.58, while West Texas Intermediate rose 0.4 per cent to $84.58 – down 8 per cent for the week.

Meanwhile, in a quiet week for local economic data, corporate shareholder meetings were set to capture the market’s focus. Commonwealth Bank and CSL shareholders are due to meet on Wednesday, with United Malt, Aurizon and Brambles on Thursday, and Newcrest on Friday.

Meanwhile, Wall Street stocks rallied on Friday night after an initial slump, as traders digested a stronger than expected US jobs report.

The world’s biggest economy added 336,000 jobs in September, according to the latest government data, initially raising concerns that this could support the case for the US Federal Reserve to again lift interest rates.

But other data from the US Labor Department helped assuage some of these worries — wage growth slowed on an annual basis while the unemployment rate held steady, the report said.

The Dow Jones Industrial Average rose 0.9 per cent to end at 33,407.58. The broadbased S&P 500 surged 1.2 per cent to 4,308.50, while the tech-heavy Nasdaq Composite Index rallied 1.6 per cent to 13,431.34.

Stocks initially declined when the US economy was seen adding about twice as many jobs as analysts expected, CFRA chief investment strategist Sam Stovall said.

The worry was that Federal Reserve officials would hold rates higher for longer or raise rates again this year to cool the economy.

But “looking at the heart of the issue, they saw that the inflation component, the wages component, came in much weaker than expected,” Mr Stovall said.

He added that the news adds to hopes of a “soft landing” for the economy, meaning inflation can come down as interest rates rise — without a damaging recession.

Apart from the overall acceleration in employment, hiring figures for August and July were revised upwards by 119,000 combined, the Labor Department said on Friday.

Average hourly earnings rose 0.2 per cent, the same rate as in August. The pick-up in employment is expected to support incomes, and this may be of concern to Fed officials as it could feed into consumer demand and inflation.

But wage growth is moderating on an annual basis, providing some relief to policymakers.

Economist Rubeela Farooqi of High Frequency Economics noted the annual change in earnings was a 4.2 per cent increase — the smallest gain since June 2021.

“A slowing in wage pressures will be welcome news,” she said. Currently, her expectation remains that there will not be further interest rate hikes this year.

If the labour market continues to strengthen, however, she cautioned that this would keep the Fed open to raising rates further in 2023.

Economist Nancy Vanden Houten of Oxford Economics added that even as the Fed is expected to “proceed cautiously,” a strong consumer inflation reading next week could also “tip the scales in favour of a rate hike” in the central bank’s November meeting.

Additional reporting: AFP