Wall St rises in broad rally

The ASX is set to extend yesterday’s gains after stocks in the US and Europe rose, while oil also tracked higher.

Wall St rose despite a fall in oil prices. Picture: AP Photo/Richard Drew.

US stocks rose broadly overnight, while European markets rebounded after improving eurozone data.

The positive global leads are set to buoy the Australian share market this morning, with ASX futures up 19 points at 6.19am (AEST).

On Wall Street, the Dow Jones Industrial Average climbed 18 points, or 0.1 per cent, to 18547. The S&P 500 rose 0.2 per cent, with materials shares leading gains across most major sectors. The Nasdaq Composite added 0.3 per cent.

US stocks have notched record highs this summer without substantial improvement in earnings growth, largely on expectations that interest rates will remain lower for longer.

“What worries me is the complacency on rates,” said Mark Spellman, portfolio manager at Alpine Funds. “If people are wrong on rates and they start going up, the market is too high — but there’s not a lot of evidence rates will go up a lot,” he said.

Investors are waiting for further clues on that in a speech to be given by Federal Reserve Chair Janet Yellen on Friday at a conference in Jackson Hole, Wyo. Her comments could provide fresh direction on the timing of the next rate rise and steer the dollar, which has fallen against major currencies this month.

Mark Watkins, regional investment manager at US Bank Wealth Management, said he expects little change to come from those meetings. He has been cautiously buying stocks in companies that specialise in home improvement and consumer services. Younger people are starting to feel more confident and they are spending more, and, in a low-interest rate environment, stocks still bring some of the best returns even if they are expensive, he said.

“There’s not a lot of concern about being hit with an interest-rate increase,” said Mr Watkins, whose firm manages $US133 billion in assets. “The Fed is still really looking at the fragile global economy and not wanting to disrupt that backdrop.”

Investors put an 18 per cent chance on a interest-rate increase coming in September, according to Fed-fund futures tracked by CME Group.

Elsewhere, US crude oil rose 1.5 per cent to $US48.10 a barrel after falling earlier in the session.

Shares of Best Buy rose 20 per cent after the company reported an unexpected increase in second-quarter profit.

The Stoxx Europe 600 climbed 0.9 per cent. European markets got a lift as surveys suggested the eurozone economy remained resilient in the immediate aftermath of the UK’s vote to leave the European Union.

IHS Markit said its measure of private-sector activity rose to 53.3 from 53.2 in July, reflecting a modest improvement. Officials at the European Central Bank are closely watching the health of the eurozone economy ahead of their meeting on Sept. 8.

“It’s too soon to expect much from today’s readings, but the surveys suggest there’s no extra dent in the eurozone recovery caused by Brexit, “ said Neil Williams, chief economist at Hermes Investment Management.

Still, “I think we’ve yet to see the worst of the financial market impact of the Brexit process,” he said, citing rising risks that other EU countries could follow the UK out the door.

In Asian trade, Japan’s Nikkei Stock Average fell 0.6 per cent as the dollar retreated against the yen, weighing on shares of export-heavy car companies.

The dollar slipped 0.1 per cent against the yen to Yen100.2060. The British pound gained 0.5 per cent to $US1.3197 as a report on UK manufacturing orders beat expectations.

The yield on the 10-year US Treasury note was at 1.553 per cent, compared with 1.541 per cent on Monday. Yields move inversely to prices.

Dow Jones