ASX set to rise as Wall Street stops bleeding

A drop in oil prices took some of the heat off the stock market, a day after crude reached its highest price of the year. Treasury yields also relaxed after rising earlier in the morning to give the stock market more of a breather, particularly Big Tech companies.

It’s a sharp departure from prior years for investors, who counted on the Fed to cut rates quickly and sharply whenever things looked dicey. High rates slow the economy by design and hurt prices for stocks and other investments, while lower rates can goose financial markets.The threat of higher rates for longer has pushed Treasury yields up sharply in the bond market. The yield on the 10-year Treasury climbed above 4.67 per cent in the morning, near its highest level since 2007.

A separate report said the US economy grew at a 2.1 per cent annual rate during the summer, following some revisions to earlier estimates. That was slightly below economists’ expectations, but economic growth looks like it’s remained solid through the third quarter at least. The question is how the trend goes in the final three months of the year.

“Until there’s a clear break from this holding pattern, investors will be living with a hawkish Fed, higher-for-longer interest rates and, likely, additional market volatility,” he said.Many other challenges are also looming over the economy and Wall Street besides the threat of higher interest rates for longer.

Trimble rose 6.5 per cent after it said it will get $US2 billion in cash and a 15 per cent ownership stake in a joint venture with agricultural machinery company AGCO. Trimble will contribute much of its precision agriculture business to the joint venture. AGCO rose 2.9 per cent.

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