US Markets Rise After Oil Prices Fall While Reserve Bank Rate Decision Looms

Wall Street stock indexes moved higher on Monday, helping the Australian sharemarket prepare for a strong open. Futures suggest a rise of 70 points, or 0.8 per cent, at the local market open following a 0.6 per cent drop on Monday. At the same time, the Australian dollar traded at US70.11 cents, while the Reserve Bank prepares to announce its interest rates decision at 2.30pm AEDT with a rate rise widely expected.

Market Movements

The S&P 500 climbed 0.6 per cent, pulling within 2.5 per cent of its all-time high after three straight losing weeks. The Dow Jones Industrial Average gained 539 points, or 1 per cent, in midday trade, while the Nasdaq composite rose 0.7 per cent. Stocks received a major lift from falling oil prices as Brent crude dropped 7.4 per cent to $US105.03 per barrel. The drop came amid ongoing market uncertainty over when conflict involving Iran might let the global oil industry return to normal. Major fuel users benefited directly from the cheaper oil, with United Airlines climbing 6.5 per cent, Southwest Airlines rising 4.4 per cent, and cruise operator Carnival jumping 5.5 per cent.

Tech And Corporate Earnings

Artificial intelligence and tech stocks showed recovery after months of shaky trading and worries over high valuations and massive data centre spending. Alphabet shares rose 1.3 per cent after a record 12 per cent drop last Thursday, while Nvidia gained 1.1 per cent. Other companies surged past analyst expectations, including hotel group Marriott International up 4.7 per cent and veterinary product seller Idexx Laboratories surging 19.4 per cent. Meanwhile, Marvell Technology dropped 7.3 per cent after announcing a plan to buy Lumentum in a deal valued at roughly $US115 billion, which caused Lumentum shares to fall 12.8 per cent. Apple fell 1.5 per cent ahead of its earnings report, and overseas markets saw gains across Europe and parts of Asia, including South Korea's Kospi jumping 2.2 per cent and China's Shanghai index rising 1.1 per cent.

Context

Global stock markets often react strongly to shifts in oil prices because energy costs directly influence inflation and corporate operating expenses. Central bank decisions, such as the upcoming Reserve Bank rate announcement, also drive major currency and sharemarket movements as investors adjust to borrowing costs.