Australian shares are poised to extend their gains on Wednesday, with futures pointing to a 0.3 per cent rise at the open, after Wall Street held firm near its record high overnight in a broadly subdued session for global markets. The ASX had already added 0.3 per cent on Tuesday, and the Economy of Australia continues to be watched closely amid shifting oil prices and global interest rate pressures.
The Australian dollar was changing hands at US71.12¢ as markets digested a mixed but broadly constructive overnight session.
Wall Street Steady as S&P 500 Hovers Just Below Its Peak
US equities were largely range-bound through the session. The S&P 500 edged up 0.1 per cent, leaving it just 0.4 per cent short of its all-time high set last month. The Nasdaq composite added 0.4 per cent, pushing further into record territory, while the Dow Jones Industrial Average slipped 168 points, or 0.3 per cent, weighed down by falls in energy and financial stocks.
Broader sentiment has been supported by a run of stronger-than-expected corporate earnings. Analysts are forecasting that companies in the S&P 500 will collectively report profit growth of nearly 29 per cent for the third quarter compared with the same period a year earlier, according to data from FactSet. If that materialises, it would mark the third consecutive quarter of earnings growth exceeding 25 per cent — a streak that has helped underpin equity prices despite elevated oil costs and lingering concerns over valuations in the artificial intelligence sector.
AutoZone was among the standout performers, surging 6.1 per cent after posting a stronger quarterly profit than analysts had anticipated, even as its revenue fell slightly short of expectations. Chief executive Phil Daniele acknowledged a "difficult selling environment" in the first two months of the quarter but said conditions improved and expressed confidence the company was "well positioned for sales growth" in the year ahead.
Recreational vehicle maker Thor Industries rose 5.1 per cent despite a more cautious tone from its leadership. Chief executive Bob Martin pointed to expensive fuel, high interest rates and persistent inflation as factors stretching customers' budgets, noting that business "never reached the inflection point many in the industry expected" during its latest fiscal year. Still, a stronger-than-forecast quarterly profit was enough to lift the stock.
Swiss sneaker and sportswear company On Holding saw its US-listed shares jump 8.8 per cent after the company outlined its financial targets for coming years and announced a share buyback program of up to US$1 billion through 2029.
Oil Prices Pull Back But Remain Elevated Amid Middle East Uncertainty
Crude oil gave back some of its recent gains overnight, though prices remain sharply higher than pre-war levels. Brent crude briefly dipped below US$98 a barrel during the US morning session before recovering to trade around US$99.66. That compares with nearly US$110 touched last week and is well above the US$72 level seen before the conflict with Iran began disrupting supply expectations.
Uncertainty over when oil flows from the Middle East might normalise has kept prices volatile, and the swings have rippled through energy stocks. ConocoPhillips fell 1.7 per cent as oil's partial retreat dragged on the sector.
Banks Under Pressure as Rate Dynamics Squeeze Margins
Financial stocks continued their soft run following last week's decision by the Federal Reserve to lift its benchmark overnight interest rate for the first time in three years. When the gap between short- and long-term interest rates narrows, banks face margin pressure — and that dynamic has been playing out in recent sessions.
JPMorgan Chase fell 3.1 per cent, making it one of the heaviest drags on the broader S&P 500. The 10-year US Treasury yield held steady at 4.96 per cent, well above the 3.97 per cent level seen before the Iran conflict began, keeping the pressure on bank earnings outlooks.
Global Markets and What to Watch
Elsewhere, most European and Asian markets posted modest gains overnight. London's FTSE 100 was an exception, dipping 0.3 per cent. With the third quarter wrapping up at the end of September, the coming weeks of earnings reports will be closely watched to see whether the strong profit forecasts hold. For local investors, the question is whether the recent positive momentum on the ASX can be sustained as oil volatility and global rate settings continue to evolve.
