ASX set to jump as Wall Street surges on debt-ceiling truce

By Lewis Krauskopf, Shreyashi Sanyal and Devik Jain October 8, 2021 â€" 5.19am

Wall Street’s main indexes jumped on Thursday (US time) in a broad-based rally led by heavyweight technology shares, after a truce in the debt-ceiling standoff in the US Congress relieved concerns of a possible government debt default this month.

The US Senate took a step toward passing a $US480 billion ($656 billion) increase in Treasury Department borrowing authority, which would put off another partisan showdown until December.

Wall Street made solid gains across the board.Credit:AP

Uncertainty over the debt-ceiling negotiations was one concern investors cited in September as the S&P 500 logged its biggest monthly percentage drop since the onset of the coronavirus pandemic in March 2020.

“Today’s (market) is driven by a slight move in Washington towards rationality about being able to pay their bills, write some cheques,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

Meanwhile, data showed the number of Americans filing new claims for jobless benefits dropped last week by the most in three months, suggesting the labor market recovery was regaining momentum as the latest wave of COVID-19 infections began to subside.

The closely watched monthly US jobs report is due on Friday.

“Today’s numbers reinforce the expectation that employment will take a significant step up in the coming months, and I think that’s positive for the economy,” said Brad Neuman, director of market strategy at Alger.

“The market climbed its wall of worry today as fears of a debt-ceiling impasse receded and hopes for an acceleration in employment gains were reinforced.”

In mid-afternoon trade, the S&P 500 is up 1.3 per cent, the Dow has added 1.3 per cent and the tech-heavy Nasdaq has jumped by 1.5 per cent. It sets up the Australian sharemarket for a positive start to the session, with futures at 4.57am AEST pointing to a gain of 50 points, or 0.7 per cent, at the open.

All 11 S&P 500 sectors were higher. Materials led the way, climbing 2.1 per cent, while consumer discretionary and healthcare also were among the top performers.

Mega-cap stocks, including Apple, Amazon.com and Microsoft, were the biggest boosts to the S&P 500. Early this week, heavyweight high-growth stocks fell sharply as Treasury yields rose.

Investors will soon turn their attention to third-quarter earnings reports that start to arrive in earnest next week.

Levi Strauss & Co shares jumped over 8 per cent after the jeans maker beat third-quarter revenue and profit estimates.

Advancing issues outnumbered declining ones on the NYSE by a 3.98-to-1 ratio; on Nasdaq, a 3.52-to-1 ratio favoured advancers.

The S&P 500 posted 30 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 81 new highs and 59 new lows.

Reuters

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