The Australian share market looks set to open higher after Wall Street’s main indexes rose with investors hopeful that lower corporate tax rates could give a boost to the overall economy.
At 0700 AEDT on Friday, the share price futures index was up 13 points, or 0.22 percent, at 6,028.
No major economic or equities news is expected on Friday.
The Australian share market on Thursday posted its first fall for the week as selling in the financial and property sectors outweighed gains by energy producers, miners, and retailers.
The benchmark S&P/ASX200 stock index dropped 15.2 points, or 0.25 percent, at 6,060.4 points, while the broader All Ordinaries index was down 11.6 points, or 0.19 percent, at 6,156.3 points.
Meanwhile, the Australian dollar has bounced to its highest level in seven weeks, helped by continued strength in commodities prices and a restrained US dollar.
Wall Street’s main indexes are higher with investors hopeful that lower corporate tax rates would allow companies to spend additional capital on dividends, new projects, and wages, which could give a boost to the overall economy.
The two chambers of the U.S. Congress approved a $1.5-trillion tax bill this week that would slash corporate tax rates to 21 percent from 35 percent.
A number of companies including AT&T, Wells Fargo, and Boeing have promised higher pay for workers or more investment in training. Some others have forecast a rise in earnings due to tax cuts.
“The impact is still work-in-progress, tax cuts are believed to add to earnings. But the unknowns are to what extent the company behavior changes in terms of CapEx policy, buybacks and wage increases,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
Gold prices edged higher, staying in their recent trading range and closely tracking moves in the dollar.
Gold for February delivery closed up 0.1% at $1,270.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have rebounded since hitting their lowest level since July last week, in part because the dollar has edged lower as investors digest the tax plan recently passed by Congress.
IRON ORE: $70.88 -0.52( January contract )
Oil prices flipped from losses to gains intraday as investors jumped back into the market after prices had pushed lower on news that a damaged pipeline could soon come back online.
U.S. crude futures recently traded up 7 cents, or 0.12%, at $58.16 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 7 cents, or 0.11%, to $64.63 a barrel on ICE Futures Europe.
The dollar was little-changed intraday, as investors digested the details of a freshly passed tax overhaul.
The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.02%, at 86.85.
Congress approved the most sweeping overhaul of the U.S. tax code in more than 30 years Wednesday, a move the White House has said will stimulate the economy and lift inflation.
Stronger growth could lead the Federal Reserve to raise rates at a faster clip, increasing the dollar’s appeal to yield-seeking investors.
The Australian dollar has bounced to its highest level in seven weeks, helped by continued strength in commodities prices and a restrained US dollar.
At 0635 AEDT on Friday, the Australian dollar was worth 77.06 US cents, up from 76.60 US cents on Thursday.
Financials led European stocks higher on Thursday in a reversal of earlier losses after a muted response to the approval by the U.S. Congress of a long-anticipated tax overhaul, while a vote in Catalonia remained in focus.
The pan-European STOXX 600 index ended the session with a 0.6 percent gain, with
Britain’s FTSE hitting a record, up 1.1 percent. Trading volumes were thin, however.
Gains were broad-based, with almost every European sector in positive territory.
Health stocks, consumer staples, and financials added the most points, while energy and materials also helped.
Hong Kong shares rose on Thursday, supported by gains in mainland markets as Beijing pledged to deepen structural reforms and curb risks to its financial system while maintaining steady economic growth in 2018.
At the close of trade, the Hang Seng index was up 132.97 points or 0.45 percent at 29,367.06.
China’s main Shanghai Composite index closed up 0.4 percent at 3,300.68 points while its blue-chip CSI300 index gained 0.93 percent.
Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.18 percent while Japan’s Nikkei index closed down 0.11 percent.
The S&P/NZX50 Index declined 19.12 points, or 0.2 percent, to 8364.44.