Stocks rose Monday as investors contemplated a potential slowdown in rate hikes from the Federal Reserve and braced for a busy week of earnings.
A parade of tech earnings and economic data releases will give investors plenty to ponder for the rest of the week with nearly a fifth of S&P 500 companies due to announce quarterly results. As major markets in China will be closed this week for the Lunar New Year festivities.
Earnings news this week is expected from the likes of Microsoft, Johnson & Johnson,Tesla, Visa & Mastercard to name a few.
On Friday, December data for personal consumption expenditures, the Fed’s preferred inflation gauge, will be published.
Markets have now priced in a nearly 100 per cent chance of a 25-basis point hike, according to CME Group data, which would bring the interest rate to a targeted range of 4.5 per cent – 4.75 per cent.
Overnight the Dow Jones Industrial Average rose 0.8 per cent, after rising more than 400 points earlier in the session. The S&P 500 added 1.2 per cent. The Nasdaq Composite surged over 2 per cent.
Semiconductor stocks and shares of Tesla and Apple gained on hopes that a reopening in China would boost their businesses. Both big tech names recently grappled with temporary shutdowns and blows to production as the country dealt with surging Covid-19 cases.
If you haven't seen all the Artificial intelligence headlines of late – your about to hear a lot more about ChatGPT as Microsoft has confirmed a “multibillion-dollar investment” , making its biggest bet yet that artificial intelligence systems have the power to transform the tech giant’s business model and products.
Precise financial details have not been disclosed, though the company on Monday said it was investing billions of dollars in a “multiyear” agreement. People familiar with the talks previously said ChatGPT was seeking $10bn from Microsoft at a $29bn valuation.
Most sectors across the market were higher. The best performing thematics included AI, SPACS Hydrogen, and EV related industries.
In commodity news, protests in Peru are threatening to choke off access to almost $4 billion worth of copper just as China’s emergence from Covid lockdowns promises to boost demand.
And the price of spot iron ore has been one of the major beneficiaries of expectations of strong demand as China re-opens its economy after abandoning its strict zero-COVID policy.
While other commodities, such as crude oil and copper, have also enjoyed recent gains on the back of the China recovery narrative, iron ore's rally seems grounded in actual gains in demand.
The spot price of benchmark 62 per cent iron ore , as assessed by commodity price reporting agency Argus, ended at $126 a tonne on Jan. 20.
This is up 7.1 per cent from the beginning of the year and the steel raw material has now surged 59.5 per cent since its low last year of $79 a tonne, reached on Oct. 31.
Futures
The SPI futures are pointing to a 0.3 per cent gain.
Currency
One Australian dollar at 8:10 AM has strengthened compared to the US dollar yesterday buying 70.26 US cents (Mon: 69.67 US cents).
Commodities
Gold added 0.2 per cent. Silver dropped 1.7 per cent. Copper rose 0.1 per cent and oil added 0.02 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE added 0.2 per cent, Frankfurt gained 0.5 per cent and Paris also closed 0.5 per cent higher.
In Asian markets, Tokyo’s Nikkei added 1.3 per cent, Hong Kong’s Hang Seng and China’s Shanghai Composite were closed.
Yesterday, the Australian sharemarket added 0.1 per cent to close at 7,457.
Ex-dividends
Mirrabooka Investments (ASX:MIR) is paying 3.5 cents fully franked
Dividends payable
Eildon Capital Group (ASX:EDC)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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