Local shares are set to open higher after a Wall Street rose for a second straight session on Wednesday, helped by higher oil prices and investors becoming more comfortable with the prospect of an interest rate hike as early as next month.
What you need2know
SPI futures up 38 points or 0.6% to 5406 at about 6am Sydney time
AUD +0.002% at US72¢
On Wall St, Dow +0.96%, S&P 500 +0.74%, Nasdaq +0.78%
In Europe, Stoxx 50 +1.71%, FTSE 100 +0.7%, CAC +1.13%, DAX 1.47%
In New York, BHP +1.23%, Rio +0.9%
Spot gold -0.23% to $US1225.07 an ounce at 6am Sydney time
Brent crude +2.6% at $US49.86 a barrel at 6am Sydney time
Iron ore -1.85% to $US50.41 a tonne at 6am Sydney time
What's on today
Local data: Private capex Q1, RBA assistant governor Debelle speaks at 11pm; NZ budget day; Fonterra to detail opening forecast for 2016-17 milk price
Local earnings: Aristocrat Leisure half year results
Overseas data: UK first-quarter GDP; US April durable goods, April pending home sales, Kansas City May manufacturing; G7 leaders meet in Japan.
Fed speaker: James Bullard, Jerome Powell
Currencies
The US dollar fell from near a 10-week high against the euro and rose just slightly against the yen on Wednesday, as traders who are betting that the Federal Reserve will soon raise interest rates took some profits on the greenback's recent gains.
The euro was last up 0.17 per cent against the dollar at $1.1161. While modest, the euro's percentage gain was set to mark the first such gain against the dollar in three sessions and marked a rebound from earlier in the day, when the euro sank to match Tuesday's roughly 10-week low of $1.1129.
The euro has fallen about 1.3 per cent since May 18, when minutes from the Federal Reserve's April meeting signalled a potential interest rate increase from the central bank in the near term. Hawkish comments from Fed officials on Monday and some strong US economic data have fanned expectations for a potential June or July rate hike.
Traders were reluctant to continue bidding the greenback higher on the premise of a near-term Fed hike, especially ahead of the US Memorial Day holiday weekend, said Steven Englander, managing director and global head of G10 FX strategy at Citigroup in New York.
Commodities
Oil rose after a government report showed that US crude inventories and production declined, easing a glut.
Crude stockpiles dropped 4.23 million barrels, according to the Energy Information Administration, more than twice what was projected by analysts in a Bloomberg survey. Production slipped an 11th week to the lowest level since September 2014. Prices dipped from the session highs after the report showed that gasoline supplies unexpectedly rose.
Gold dropped to the lowest level in seven weeks as home sales in the US rose, adding to speculation the economy can withstand higher interest rates and the Federal Reserve may tighten policy this summer.
Bullion for immediate delivery fell as much as 0.5 per cent to $1,220.90 an ounce, the lowest since April 6, and traded at $1221.02 by 10:29 a.m. in London, according to Bloomberg generic pricing. The metal has sunk 4.5 per cent since May 17, the biggest six-day drop since November.
Gold is paring this year's gains on prospects for a rate rise in June or July that boosted the dollar yesterday to a two-month high. Traders are now pricing in a better-than-even chance of higher borrowing costs by July, with Fed officials voicing support for a move should recent strength in the economy be sustained.
United States
The S&P 500 Index added 0.8 per cent to 2092.67 at 2:34 p.m. in New York, the highest level in almost a month after a 1.4 per cent rally on Tuesday. Investors weighed data today that showed home prices rose in the first quarter for signs on the health of the economy amid increasing bets that the Fed is confident enough to raise rates.
"Yesterday was certainly a big day, and with the breadth in the market and some of the key groups rallying with bank stocks and semiconductor stocks, these are things telling us that we might be able to hold the rally this time," Matt Maley, an equity strategist at New York-based Miller Tabak & Co, said by phone.
Banks in the benchmark led Wednesday's move, headed toward their highest level since Jan. 6 amid bets that higher rates will boost profits. Bank of America and Citigroup rallied more than 2 per cent. Energy producers followed oil higher, with crude above $US49 a barrel, helped by a retreating dollar that also bolstered gains in raw-materials companies.
Europe
The Stoxx Europe 600 Index added 1.3 per cent, with almost all industry groups climbing. Banks and energy producers posted the biggest gains. The equity measure closed above its 50-day moving average on Tuesday for the first time after slipping below it earlier this month. That sends a short-term bullish signal in technical analysis, according to Saxo Bank trader Pierre Martin.
What happened yesterday
Australian shares enjoyed a bumper session on Wednesday after a pick-up in iron ore and oil prices.
Locally, the benchmark S&P/ASX200 added 1.4 per cent to 5372.5 while the broader All Ordinaries lifted 1.4 per cent to 5436.8.
