ASX set for bright start as Wall Street hits new high

A choppy day of trading on Wall Street ended with indexes mixed on Tuesday (US time) as a drop in bond yields hurt bank stocks but helped big technology companies.

The S&P 500 rose 0.3 per cent after briefly slipping into the red in the early going. The modest gain nudged the benchmark index to an all-time high. Technology stocks and companies that rely on consumer spending helped lift the broad market index. The gains were tempered by a pullback in banks, industrial companies and other stocks.

The Australian sharemarket is poised to start the day in positive territory, with futures at 6.59am AEST pointing to a gain of 19 points, or 0.3 per cent, at the open.

Johnson & Johnson fell 1.3 per cent after US regulators recommended a pause in using its single-dose COVID-19 vaccine to investigate reports of possibly dangerous blood clots. Moderna, which also makes a COVID-19 vaccine, climbed 7.4 per cent.

Worries about the potential loss of a vaccine option also pulled down companies that are counting on pandemic restrictions easing, though the losses eased by the end of the day. American Airlines slipped 1.5 per cent and Delta Air Lines fell 1.1 per cent.

The broader market has been mostly notching gains this month, reflecting cautious optimism among investors that the economy will strengthen and corporate profits will improve as the distribution of COVID-19 vaccines paves the way for more restrictions on businesses to be lifted. A pause in the rollout of the Johnson & Johnson vaccine isn’t going to derail that, analysts said.

“The response today has been very muted and isolated,” said, Scott Knapp, chief market strategist at CUNA Mutual Group. “Markets don’t expect lockdowns. The recovery may be delayed, but not a return to pandemic conditions.”

The market’s initial sell-off on the J&J news was “a bit of an overreaction,” said Jay Hatfield, CEO of Infrastructure Capital Management.

“We had a dress rehearsal for this last week because there was a huge disruption to the J&J supply and nobody seemed to care,” Hatfield said. “Clearly, the recovery is not dependent on J&J significantly.”