Australian shares are expected to start the day higher as Wall Street has gained on upbeat economic data and encouraging Omicron update.
- The ASX looks set to follow Wall Street’s rally upwards at the open
- US consumer confidence improved further in December
- European shares ended on Wednesday at near one-week highs
ASX futures were up 0.4 per cent to 7,300, by 7:22am AEDT.
The Australian dollar was trading at $72.10 US cents, slightly higher than yesterday (up 0.8 per cent).
Wall Street’s main indexes pushed higher on Wednesday in a broad rally after upbeat consumer confidence and other economic data and hopeful developments about the severity of the Omicron coronavirus variant that is sweeping the world.
Stocks gained for a second straight session as volatility has ratcheted up in the last month of 2021 following the arrival of Omicron and an otherwise strong year for equities.
A South African study suggested reduced risks of hospitalisation and severe disease in people infected with the Omicron variant versus the Delta one, but World Health Organization officials cautioned that it was too soon to draw firm conclusions.
“We are still struggling for direction in the face of the Omicron outbreak, but in the past few days … more and more evidence is building that the strain is potentially less severe than prior strains, specifically Delta, which bodes well for economic momentum in 2022,” said Mike Stritch, chief investment officer at BMO Wealth Management.
The Dow Jones Industrial Average rose 195 points, or 0.55 per cent, to 35,687, by 7:21am AEDT.
US consumer confidence improved further in December, suggesting the economy would continue to expand in 2022.
The survey from the Conference Board showed more consumers planned to buy a house and big-ticket items such as motor vehicles and major household appliances as well as go on vacation over the next six months.
Other reports showed US home sales increased for a third straight month in November, and that gross domestic product increased at a 2.3 per cent annualised rate in the July-September quarter, revised up from the 2.1 per cent rate estimated last month.
All 11 major S&P 500 sectors were higher, led by consumer discretionary.
The benchmark S&P 500 was up about 24.5 per cent so far in 2021.
European shares at near one-week highs
European shares ended on Wednesday at near one-week highs, led by gains in technology and industrial stocks, even as investors worried about the outlook for global recovery amid a rise in COVID-19 cases due to the Omicron variant.
The pan-European STOXX 600 climbed 0.8 per cent, adding to a 1.4 per cent jump in the previous session, which was also its best day in two weeks.
Technology shares led gains, followed by industrials, travel and construction-related stocks.
Global markets have been on edge this month as the rapidly spreading Omicron strain of the coronavirus has pushed some countries to reimpose restrictions on daily life, disrupting travel and hampering economic activity.
“There’s a lot of treading water going on and waiting for the Omicron storm to hit, as a lot of traders are hanging onto every bit of scientific data around the severity of the new strain,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Thin liquidity and risk associated with Omicron’s spread have led to volatility in the benchmark index in recent days.
Meanwhile, the European Central Bank could raise rates as soon as the end of next year, and heralding an end to ECB bond purchases would be a strong signal that the move is coming in the next two quarters, Governing Council member Robert Holzmann said.
The ECB at its last meeting promised to provide monetary support by temporarily doubling its asset purchases before it ends its emergency bond buys by next March.