ASX set to open higher despite Wall Street’s wobbles

Stocks wobbled in afternoon trading on Wall Street on Tuesday in New York as the market comes off its worst month since early in the pandemic nearly two years ago.

In early afternoon trade, the S&P 500 is 0.2 per cent lower, the Dow Jones has added 0.1 per cent and the Nasdaq is 0.1 per cent higher. The Australian sharemarket is poised for gains with futures at 4.53am AEDT pointing to a gain of 25 points, or 0.4 per cent, at the open.

Companies that make home goods and personal products fell. Procter & Gamble shed 1.6 per cent.

Energy stocks made solid gains, led by a 6.1 per cent rise from Exxon Mobil after the company reported a surprisingly good profit in its fourth quarter as demand for oil continues to improve.

Banks also gained ground as bond yields rose. The yield on the 10-year Treasury, which is used to set rates on home mortgages and many other kinds of loans, rose to 1.81 per cent from 1.77 per cent late Monday. Bank of America rose 1.1 per cent.

Technology stocks were mixed, which helped mute trading in the rest of the market. The sector has been particularly sensitive to concerns about rising interest rates this year. Higher interest rates tend to make pricey growth stocks, like big tech companies, less attractive for investors.

Stocks have been in slump so far this year as investors get hit with a long list of threats to economic growth and the markets.

The economic recovery is being threatened by persistently rising inflation that has raised costs for businesses and consumers. The big fear is that higher prices being passed off to consumers will eventually curtail spending and crimp economic growth.

The Federal Reserve is shifting monetary policy and plans on raising interest rates to fight rising inflation, which will affect investments and stock prices. Ultra-low rates and other stimulus helped markets recover from the initial shock of the coronavirus pandemic, and then supported stunning gains. Investors expect the Fed to start raising interest rates in March, but there is much uncertainty about how sharply and how quickly the Fed will move throughout the year.