ASX set to jump despite unsteady Wall Street session

Smaller company stocks bucked the broader market. The Russell 2000 index rose 12.37 points, or 0.6 per cent, to 2,206.37.

Stocks have been choppy this week as traders reacted to the big rise in bond yields. The S&P 500 and Dow both set all-time highs on Monday, only to lose ground in subsequent days. The major indexes are now on pace to post weekly losses.

Investors have been closely monitoring rising inflation’s impact on consumers and businesses. They have also been watching the Fed’s plans to dial back its ultra-low interest rate policies. Minutes from the central bank’s meeting in December showed that policymakers expressed concerns that inflation, which has surged to four-decade highs, was spreading into more areas of the economy and would last longer than they previously expected.

The central bank has already said it will accelerate the reduction of its bond purchases, which have helped keep interest rates low. Investors are watching for the impact from that pullback and gauging how quickly and how often the central bank will raise its benchmark interest rate.

Wall Street has also been weighing several economic reports this week.

On Thursday, The Institute for Supply Management reported that growth in the US service industry, where most Americans work, pulled back in December after expanding at a record pace the previous two months.

The Labor Department reported that the number of Americans applying for unemployment benefits rose last week but remained at historically low levels, suggesting that the job market remains strong. The agency will release its monthly jobs report on Friday.

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Wall Street may be bracing for a stronger-than-expected jobs report, given that payroll processor ADP’s latest monthly hiring survey, which was released Wednesday, showed that private US companies hired 807,000 workers in December, or more than double the consensus forecast, according to FactSet. A strong jobs report could give the Federal Reserve more urgency to raise interest rates in order to tackle inflation.

Beyond technology companies, a mix of retailers and health care stocks weighed on the market Thursday. Tesla fell 2.2 per cent and UnitedHealth Group fell 4.1 per cent

Banks benefited from the rise in bond yields, which allow lenders to charge more lucrative interest on loans. Citigroup gained 3.3 per cent.

US crude oil prices rose 2.1 per cent, which helped push energy stocks higher. ConocoPhillips rose 3.8 per cent.

AP