ASX set for more gains as Wall Street jumps; $A bounces

“In our view, this morning’s February retail sales report offers evidence of a limited, modest economic slowdown, rather than signalling a gathering recession,” said Jennifer Timmerman, investment strategy analyst at Wells Fargo Investment Institute.

It’s a sharp turnaround for investors even to be talking about a possible recession after the US economy closed last year running at a solid rate. Excitement at the time was also building about policies coming from Trump to accelerate growth. To be sure, hiring still remains relatively healthy, and that could help keep the economy growing. But the talk about recession by itself could sap confidence.

That’s the precarious stage onto which Federal Reserve Chair Jerome Powell will step Wednesday, when he announces the Fed’s latest decision on interest rates.

Virtually no one expects the Fed to make a move Wednesday. The central bank has been keeping rates steady so far this year, preferring to see how conditions play out. Earlier, heading into the end of last year, it had been cutting rates sharply in hopes of relaxing pressure on the US economy after high inflation had slowed.

Wall Street’s focus will be on what Powell says about the rest of the year. Expectations are still high the Fed may cut its main interest rate two or three times in 2025. The risk of cutting interest rates too quickly or aggressively is that it could push up inflation. But keeping rates too high for too long could also create unnecessary pain for the economy by slowing borrowing and overall activity.

On Wall Street, Intel climbed 6.8 per cent to extend its gains after the chip company named former board member and semiconductor industry veteran Lip-Bu Tan as its CEO last week.

PepsiCo added 1.9 per cent after saying it agreed to buy Poppi, a prebiotic soda brand, for a net $1.65 billion.

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They helped offset a 4.8 per cent drop for Tesla. The electric-vehicle company’s stock has been struggling this year amid worries that its brand has become too intertwined with Elon Musk, who has been leading efforts to cut spending by the US government. Tesla vehicles and dealerships have become targets of people unhappy with Trump and his policies.

All told, the S&P 500 rose 36.18 points to 5,675.12. The Dow Jones gained 353.44 to 41,841.63, and the Nasdaq composite climbed 54.58 to 17,808.66.

In the bond market, Treasury yields were mixed. The yield on the 10-year Treasury went from 4.28 per cent shortly before the release of the retail sales report to nearly 4.33 per cent immediately afterward. It then pulled back to 4.29 per cent, down from its 4.31 per cent level late Friday.

In stock markets abroad, indexes rose across much of Europe and Asia.

Chinese markets rose after the government reported stronger than expected factory data. Later Monday, officials briefed reporters about Beijing’s efforts to get consumers to spend more, seen as key to getting the economy out of its doldrums.

Stocks rose 0.8 per cent in Hong Kong and 0.2 per cent in Shanghai. Stock markets outside the United States have been beating Wall Street so far this year, flipping the leaderboard after years of US dominance.

AP