Australian shares to start higher after mixed Wall Street session
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The news: The Australian sharemarket is set to start higher despite two of the three major indices on Wall Street ending weaker in a fickle session dominated by the direction of mega caps.
The numbers: The Dow Jones index hung onto early gains to end 0.20% higher, but the broader S&P 500 lost 0.51% and the tech-heavy Nasdaq fell 0.93%. In the local market, ASX 200 futures were up 33 points or 0.42% at 7,865 points at 7:00am AEST on Friday.
The context: US stocks failed to regain ground lost in the previous day's tech-triggered sell-off as investors sought out value away from the megacaps.
Heavyweight stocks have powered the market to all-time highs this year, but Wednesday's sell-off reinforced fears that these stocks might be over-stretched and are in for more turbulence. The Cboe Volatility Index, known as Wall Street's fear gauge, extended its recent gains to close at a fresh 14-week high.
With investors still trying to grapple with disappointing earnings reports, and political and economic uncertainty, recent data showed a resilient US economy.
The latest GDP report showed the US economy expanded 2.8% in the second quarter versus an estimate of 2%. Inflation subsided, leaving expectations of a September Federal Reserve interest rate cut intact. All eyes are now on personal consumption expenditures price data later on Friday to confirm bets of an early start to Fed rate cuts.
The source: Reuters
