ASX set to rise as ‘Magnificent Seven’ drive US stocks to all-time highs

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The Australian sharemarket is set to open stronger this morning after the world’s largest technology companies drove US stocks to all-time highs, while bond yields fell with traders pricing in two rate cuts in 2024

The Australian sharemarket is set to open stronger this morning after the world’s largest technology companies drove US stocks to all-time highs, while bond yields fell with traders almost fully pricing in two Federal Reserve rate cuts in 2024.

Meanwhile, Treasury 10-year yields dropped five basis points to 4.28 per cent. The loonie fell after the Bank of Canada became the first Group of Seven central bank to kick off rate cuts, boosting hopes others will follow. More key data on the Australian economy will come out this morning with the release of the Balance of Trade for April at 11.30am AEST.

Facebook parent Meta jumped 3.8 per cent, Microsoft gained 1.9 per cent, Amazon went up 1.1 per cent and Google’s parent company Alphabet rose 0.9 per cent. Apple and Hewlett Packard shares both added 0.8 per cent. The loonie slid as the Bank of Canada also said it’s “reasonable to expect further cuts” if inflation progress continues. The euro edged lower, with the European Central Bank expected to start a rate cutting cycle tonight before the Fed for the first time ever. Bitcoin topped $US71,000.

Investors are refocusing on megacaps, and for good reason, according to Ed Clissold at Ned Davis Research. After a strong May, the top 10 stocks account for 35.7 per cent of the S&P 500 Index’s market cap — a record since at least 1972, he noted.

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