ASX set to rise as strong retail sales boost Wall Street

Shares are higher on Wall Street as investors review an encouraging report on retail and a mixed group of earnings updates from several major retailers.

The S&P 500 is 1.8 percent higher in late trading while the Dow Jones has added 1.3 percent to 32,423 and the Nasdaq has risen 2.7 percent. The strong lead will strengthen the Australian stock market, with futures at 5:02 AEST indicating an increase of 62 points, or 0.9 percent, at the opening.

A strong retail report strengthened investor confidence. Credit:Bloomberg

The highly volatile technology sector led the success. Apple rose 2.7 percent and Microsoft rose 1.8 percent. Expensive stock values ​​for many large technology companies give the sector more weight when it comes to driving the broader market up and down.

The profits were broad and included retailers, healthcare companies and industrial companies. Amazon rose 4 percent. Abbott Laboratories rose 4.1 percent after the company made an agreement with regulators to increase the production of breast milk substitutes in short supply.

Banks won ground along with rising bond yields, which they rely on to charge more lucrative interest rates on loans. The interest rate on the 10-year government bond rose to 2.97 percent from 2.88 percent late on Monday. JPMorgan Chase rose 2.7 percent.

The solid gains on Tuesday come as the broader market struggles to break a six-week slump.

The Department of Commerce said retail sales in the United States rose 0.9 percent in April. The solid increase was driven by higher sales of cars, electronics and more spending on restaurants. The positive report helps alleviate some concerns on Wall Street about persistently high inflation, which is pushing up consumer spending and about the possibility that the economy could slip into a recession.

“The retail sales report really boosted investor confidence that consumers are doing well,” said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance. “As long as consumers remain strong, the chances of us entering a 2022 recession are very low.”

Inflation is at its highest level in four decades, driven by demand for goods that exceed the supply in the aftermath of the pandemic. Problems in the supply chain have led companies to raise prices for everything from food to clothing. Rising energy prices following Russia’s invasion of Ukraine exacerbated inflationary pressures, as did China’s austerity measures over the past month as it faces a resurgence of covid-19 falls in major cities.

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