ASX set for gains as Wall Street rises ahead of tech giants’ results

UPS, meanwhile, swung between gains and losses after reaching a tentative deal with 340,000 unionised workers to raise pay, which potentially averts a strike. UPS was down 1.2 per cent

This week’s other highlight for Wall Street also got underway Tuesday: the Federal Reserve’s latest meeting on interest rates.

The wide expectation is for the Fed on Wednesday to announce another increase to interest rates, as it tries to get high inflation under control. That would take the federal funds rate to a range of 5.25 per cent to 5.50 per cent, its highest level since 2001 and up from virtually zero early last year.

High rates grind down on inflation by slowing the entire economy and hurting prices for stocks and other investments. The hope among traders is Wednesday’s move will be the final increase of this cycle because inflation has been cooling since last summer.

Such hopes, along with rising belief that the economy can avoid a long-predicted recession, have helped stocks rally strongly this year. The job market has remained remarkably solid, which has allowed US households to keep spending and propping up the economy. A report on Tuesday showed confidence among US consumers rose by more than economists expected.

But many on Wall Street warn the Fed is unlikely to give any signals on Wednesday that it’s done raising rates. Inflation is still high, even if it’s moderated somewhat, and the economy may have to “yield to a long but shallow recession if the Fed is to return inflation to its 2 per cent target,” according to Steven Ricchiuto, US chief economist at Mizuho Securities.

Loading

In the bond market, yields were mixed for Treasurys.

The 10-year Treasury yield rose to 3.90 per cent from 3.88 per cent late Monday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on the market’s expectations for Fed action, slipped to 4.90 per cent from 4.92 per cent.

In markets abroad, stock indexes were mixed.

Stocks jumped 4.1 per cent in Hong Kong and 2.1 per cent in Shanghai. Chinese leaders have promised measures to boost sluggish economic growth by supporting real estate sales and other struggling sectors but gave no details and didn’t mention possible stimulus spending.

Indexes moved more modestly around the rest of the world.

AP

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.