ASX set for flat start, Wall Street drifts higher; $A jumps

Sydney Morning Herald

2 days ago

US stocks are drifting on Wednesday following some potentially discouraging updates on the US economy.
The S&P 500 was edging up by 0.2 per cent in afternoon trading, as momentum slowed following a big rally that had brought it back within 2.8 per cent of its all-time high. The Dow Jones was up 26 points, or 0.1 per cent, and the Nasdaq composite was 0.5 per cent higher. The Australian sharemarket is set to inch higher, with futures at 5.01am AEST pointing to a rise of 2 points at the open. The ASX rose by 0.9 per cent on Wednesday.
The Australian dollar rose 0.6 per cent to 64.98 US cents at 5.19am AEST.
In the bond market, Treasury yields fell following a pair of weaker-than-expected reports on the economy. One said that activity contracted for US retailers, finance companies and other businesses in the services industries last month, when economists were expecting to see growth. Businesses told the Institute for Supply Management in its survey that all the uncertainty created by tariffs is making it difficult for them to forecast and plan.
A second report suggested US employers outside of the government hired far fewer workers last month than economists expected. The report from ADP said private employers hired just 37,000 more workers than they fired, down from the prior month's 60,000.
That could bode ill for Friday's more comprehensive jobs report coming from the US Labor Department, which is one of Wall Street's most anticipated data releases each month. So far, the US job market has remained remarkably resilient despite years of high inflation and now the threat of President Donald Trump's high tariffs. But weakness there could undermine the rest of the economy.
To be sure, ADP's report historically has not been a perfect predictor of what the US Labor Department's report will say.
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'Whether this report is accurate or not, traders and investors will read today's number as a dark result for trading today,' according to Carl Weinberg, chief economist at High Frequency Economics. 'This may be the tip of an iceberg, but it also could be a false start.'