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ASX 200 set to open 22 points higher as Waller's hold signal cuts Fed hike odds to 48.4%

Spot gold rose 1.97% to US$4,474.13 and the Australian dollar closed at a 100-session high of 0.7203. Four ASX 200 members trade ex-dividend and the local calendar is empty.

Bullish3 min readBy Swingfolio Research

At a glance

ASX 2009,020+0.46%
S&P 5007,748+1.06%
NASDAQ26,584+1.40%
Dow53,686+1.18%
VIX14.32-5.79%
Gold4,474+1.97%
Brent95.89+0.27%
AUD/USD0.7203+0.45%
SPI_F9,042+0.25%

ASX 200 set to open 22 points higher as Waller's hold signal cuts Fed hike odds to 48.4%

Sentiment: bullish ASX 200 futures: +0.25%

Federal Reserve Governor Christopher Waller said on Thursday he is inclined to hold rates steady this month, and CME FedWatch odds of a September hike fell to 48.4%, down about 15 percentage points from Wednesday, carrying the S&P 500 up 1.06% to 7,747.71 and the US 10-year yield down 3.4 basis points to 4.762%. SNOW.US gained 16.55% to US$356.47 on its quarterly result while AVGO.US fell 2.74% despite an earnings beat, its December-quarter guidance landing under consensus. SPI futures point the S&P/ASX 200 22 points or 0.25% higher from Thursday's close of 9,020.1.

Overnight drivers

  • Waller broke with Chair Kevin Warsh on the September meeting. "I would be inclined to support holding the target for the federal funds rate at its current setting," Waller said, arguing the three-month pace of the Fed's preferred inflation gauge has eased from 4.76% in February to 3.05%. Warsh's Jackson Hole remarks had lifted hike odds to 66.1% on Monday.
  • US 10-year yield 4.762%, down 3.4 basis points, and the dollar index 99.003, down 0.56%. Australia's 10-year sits at 5.141%, 8.2 basis points under the 15-year high of 5.223% it set on Wednesday.
  • Spot gold rose 1.97% to US$4,474.13 and silver 2.54% to US$66.98. Both moved on the softer dollar and lower yields. EVN.AU, NST.AU, NEM.AU and GMD.AU had already closed between 2.60% and 3.34% higher in Thursday's local session, before this leg.
  • AVGO.US guided December-quarter revenue to about US$34.8bn against roughly US$35.05bn consensus. AI semiconductor revenue was US$16.70bn, up 221% year on year, and the stock still finished 2.74% lower at US$357.16. WTC.AU fell 2.36% and XRO.AU 0.63% on Thursday.

Overnight Wall Street

  • S&P 500: 7,747.71 (+1.06%)
  • Nasdaq: 26,584.06 (+1.40%)
  • Dow: 53,686.11 (+1.18%)
  • Russell 2000: 2,968.27 (+0.51%)
  • VIX: 14.32 (-5.79%)

All three headline indices closed at their highest level of the week, and the VIX at 14.32 was its lowest close of the week. The Russell 2000's 0.51% gain came to less than half the S&P 500's 1.06%, so the buying stayed in large caps. HOOD.US rose 16.57% to US$124.72 on analyst upgrades. NVDA.US added 1.80% to US$228.45 after agreeing to acquire AI platform Hugging Face.

Commodities and FX (AU relevant)

  • Spot gold: US$4,474.13/oz (+1.97%)
  • Silver: US$66.98/oz (+2.54%)
  • Brent: US$95.89 (+0.27%)
  • WTI: US$91.75 (+0.81%)
  • Iron ore 62% Fe: US$99.42/t (+1.74%)
  • Copper: US$6.58/lb (+1.28%)
  • AUD/USD: 0.7203 (+0.45%)

Iron ore at US$99.42 sits 58 cents under US$100/t and 6.10% above its level a month ago. Crude held the premium built earlier in the week after the Strait of Hormuz strikes, Brent at US$95.89 and WTI at US$91.75. AUD/USD at 0.7203 marks its highest close in 100 sessions, which trims the Australian dollar value of USD revenue at CSL.AU.

Key themes for ASX open

  • EVN.AU $15.01, NST.AU $23.17, NEM.AU $174.93 and GMD.AU $8.36 all closed higher on Thursday, and gold added another 1.97% after the local market shut.
  • CBA.AU rose 0.79% to $160.58 on Thursday as the local market snapped a three-day slide, and the US 10-year has since eased 3.4 basis points to 4.762%.
  • BHP.AU fell 1.35% to $63.78 on Thursday while RIO.AU gained 1.28% to $177.11 and FMG.AU 2.05% to $16.95. Iron ore rose 1.74% overnight.
  • WDS.AU fell 2.60% to $32.22 and STO.AU 0.36% to $8.28 on Thursday, ahead of Brent's 0.27% overnight gain.
  • APE.AU, ALD.AU, VEA.AU and ABB.AU trade ex-dividend this morning. ABB.AU pays 3.6 cents per share fully franked on 21 September.

Economic calendar today

  • No scheduled Australian data releases. The next local print is ANZ-Indeed Job Ads on Monday 7 September at 11:30 AEST.
  • 22:30 AEST: US August employment report, the last major labour reading before the Federal Reserve's 15 and 16 September decision.

What to watch

  • Breadth on the open. The Russell 2000 gained 0.51% against the S&P 500's 1.06% overnight.
  • Whether the ASX 200 holds 9,000, a level it reclaimed on Thursday after three consecutive declines.
  • Australia's 10-year at 5.141%, 8.2 basis points under Wednesday's 15-year high.

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Disclaimer

This briefing provides market observations and general information only. It is not personal financial advice and does not take into account your objectives, situation or needs. Past performance is not a reliable indicator of future performance. Consider seeking independent advice before acting on any information presented here.

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