ASX Futures Rise as Oil Prices Slide and Bond Yields Ease
The S&P 500 gained 1.1 percent as Brent crude dropped to 104.79 USD. The ASX 200 futures indicate a 0.7 percent opening gain for the Australian market.
The S&P 500 index rose by 1.1 percent in US trading. This marked the second positive session for the benchmark in the last nine days. The Dow Jones Industrial Average increased by 358 points, representing a 0.7 percent gain. The Nasdaq composite climbed 1.6 percent, leading the broader market recovery.
Brent crude oil prices fell by 1 percent to 104.79 USD per barrel. This decline eased pressure on the bond market. The yield on the 10-year US Treasury note dropped to 4.95 percent from 5.01 percent late Wednesday. Lower yields reduced borrowing costs and supported equity valuations.
Australian market opens higher
ASX 200 futures point to a 57-point increase at the open. This represents a 0.7 percent gain for the Australian share market. The Australian dollar strengthened to 71.11 US cents. The local market had added 0.4 percent in the previous session.
Fed hike impacts investor sentiment
The Federal Reserve raised the federal funds rate by 0.25 percent. This was the first increase in more than three years. Officials signaled that at least one more hike may occur this year. The central bank aims to keep rates elevated through next year to control inflation.
Higher interest rates increase the cost of borrowing for businesses and households. This dynamic can slow economic activity and reduce corporate profits. Investors also shift toward bonds when yields rise, as fixed-income investments become more attractive. This reduces demand for equities and other risk assets.
Tech stocks lead recovery
Shares in the artificial intelligence sector rebounded from earlier losses. Nvidia stock climbed by 2.6 percent during the session. Advanced Micro Devices shares rose by 6.5 percent. These gains helped offset declines in other sectors of the market.
US economic data showed resilience despite higher rates. Initial jobless claims fell last week, indicating a tight labor market. Manufacturing activity in the mid-Atlantic region grew faster than expected. Fed Chair Kevin Warsh cited a strengthening economy as a key reason for the rate hike. He also noted geopolitical risks, specifically the impact of the war with Iran on energy prices.
