ASX opens brightly after Wall Street breaks losing streak

The Australian sharemarket has started the session in the green, marking a departure from yesterday’s six-week low despite a mixed trading overnight on Wall Street that saw US markets break a 4-day losing streak.

The S&P/ASX200 ticked up 1.1 per cent, or 81.8 points, to 7108.7 in early trade on Wednesday, lifted by the energy companies, particularly Origin Energy, whose takeover remains on track despite the federal government’s decision to impose temporary price caps on gas.

The miners were also in positive territory, with BHP up 1.4 per cent and Rio Tinto up 0.5 per cent.

The North American consortium behind an $18.4 billion takeover offer for Origin Energy has informed the company it has not identified “adverse matters” that could derail its bid, despite market concerns about the east coast gas price caps. Origin shares started the session 6.2 per cent stronger.

Meanwhile, battery materials company Novonix has lost 5 per cent of its share price, and TPG Telecom slipped 3.1 per cent after the ACCC blocked a landmark infrastructure deal between it and Telstra, warning it would lessen competition and leave Australian mobile users worse off. Telstra shares slipped 0.12 per cent to $4.04.

Overnight, US stocks oscillated between gains and losses throughout a volatile session, with technology shares still under pressure after last week’s hawkish central bank turn. Treasuries slumped, with the global bond market digesting the Bank of Japan’s sudden increase in its yield trading band.

The S&P 500 ended the session with a modest gain, snapping a four-day losing streak. The tech-heavy Nasdaq 100 fell for the fifth day, its longest stretch of declines since October. With few macro catalysts before the end of the year, swings are liable to pick up, as stocks witnessed on Tuesday.

Fresh economic data showed new US home construction continued to decline in November and permits plunged, an indication that Federal Reserve tightening is serving its purpose. However, closing prices climbed in the third quarter, and the Fed will continue to raise rates if housing remains costly, which could be detrimental for risk assets in the long term. Investors are also awaiting earnings from FedEx and Nike after the markets close.

Treasuries broadly held losses, with the 10-year rate climbing to around 3.69 per cent. Yields rose after a hawkish move from the Bank of Japan (BoJ) sent the yen soaring more than 4 per cent against the dollar at one point. Analysts reckon more losses lie ahead as Japanese investors – major players in US and European debt – have more incentive now to bring money home.