STAN CHOE
The Australian sharemarket is expected to edge slightly lower at the open on Friday after Wall Street and oil prices rose overnight on renewed hopes for the fragile ceasefire in the Middle East.
Futures markets are pointing to a fall of 8 points in the S&P/ASX200 after Wall Street finished with a 0.6 per cent gain after Israel’s prime minister authorised direct negotiations with Lebanon. That eased worries that the two-week ceasefire announced late Tuesday may already be in trouble because of Israel’s bombardment of Lebanon.
The Dow Jones Industrial Average added 275 points, or 0.6 per cent, and the Nasdaq composite climbed 0.8 per cent after both indexes likewise recovered from early losses.
The Australian market rose 0.2 per cent on Thursday as oil prices rebounded and growth stocks sold off. The Australian dollar was trading at US70.80¢ at 7.12am AEST.
Crude oil prices pared some of their gains, but they nevertheless remained higher for the day on uncertainty about when oil tankers can start fully flowing through the Strait of Hormuz. The narrow waterway has been at the center of President Donald Trump’s demands of Iran, and blockages there have kept oil and natural gas stuck in the Persian Gulf and away from customers worldwide.
The price for a barrel of benchmark U.S. crude rose 3.7 per cent to settle at $US97.87 after briefly nearing $US103 in the morning. Brent crude, the international standard, added 1.2 per cent to $US95.92 per barrel.
Given how far apart the United States and Iran seem to be in their demands, upward pressure on oil prices may be “here to stay for a while” according to strategists at Macquarie led by Thierry Wizman. Risks remain for renewed fighting, which could cause customers worldwide to hoard whatever oil supplies they do get. That could itself keep oil off the market, much like actual fighting targeting pipelines or oil tankers.
Oil prices have been swinging through sharp and sudden reversals for weeks with hopes rising and falling for the Strait of Hormuz to fully reopen and allow production of oil and natural gas to kick back into gear. Brent oil has gone from roughly $US70 per barrel before the war in late February to more than $US119 at times.
Despite all the swings, the U.S. sharemarket isn’t far from its all-time high. The S&P 500 is just 2.2 per cent below its record set in January.
Constellation Brands climbed 8.5 per cent for one of the index’s biggest gains overnight after reporting stronger results for the latest quarter than analysts expected. The company, which sells Modelo beer and Robert Mondavi wines, said it saw encouraging trends heading into its new fiscal year. But it pulled its financial forecasts for the following fiscal year because of “limited near-term visibility” and other factors.
CoreWeave rose 3.5 per cent after announcing an expanded, $US21 billion deal with Meta Platforms to provide AI cloud capacity through December 2032. Meta climbed 2.6 per cent.
On the losing end of Wall Street was Simply Good Foods, which sank 18.1 per cent after reporting a worse drop in revenue than analysts expected. CEO Joe Scalzo called the results unsatisfactory and said the company behind the Quest and Atkins brands is making immediate changes to turn around its performance. It was also a poor day for Australian-founded Altassian – its shares dropped 7.3 per cent.
All told, the S&P 500 rose 41.85 points to 6,824.66. The Dow Jones Industrial Average added 275.88 to 48,185.80, and the Nasdaq composite climbed 187.42 to 22,822.42.
Mixed reports on the U.S. economy also helped keep Wall Street in check. One said an underlying measure of inflation the Federal Reserve considers important was slightly hotter in February than economists expected. It decelerated before the war with Iran began, but not by as much as economists expected.
A separate report said that more U.S. workers applied for unemployment benefits last week than economists expected. The number was not very high compared with history, but it could indicate an acceleration in layoffs.
Treasury yields swiveled up and down in the bond market following the reports before pulling near where they were the day before.
The yield on the 10-year Treasury edged down to 4.28 per cent from 4.29 per cent late Wednesday. It’s still well above its 3.97 per cent level from before the war, which has sent rates higher for mortgages and other kinds of loans going to U.S. households and businesses.
