Australian shares are set to open higher, after the S&P 500 inched closer to a new all-time high.

ASX futures were up 0.1% or 5 points as of 8:30am on Monday, suggesting a higher open.

The S&P 500 ended Friday less than 0.1% higher, within 0.3% of a record high that has stood for more than two years. The tech-heavy Nasdaq Composite also added less than 0.1%. The Dow Jones Industrial Average declined 0.3%, or 118 points.

Each index still ended the week higher, after declining in the first week of January. Many analysts believe the market's January performance sets the tone for the rest of the year.

In commodity markets, Brent crude oil rose 1.1% to US$78.29 a barrel while gold was up 1.0% to US$2,049.06.

In local bond markets, the yield on Australian 2 Year government bonds was down at 3.80% while the 10 Year yield was also down at 4.07%. US Treasury notes were lower, with the 2 Year yield down at 4.14% and the 10 Year yield up at 3.94%.

The Australian dollar was unchanged at 66.84 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was up at 96.90.


Chinese shares closed lower as deflation concerns deepened after official data showed domestic CPI fell for a third straight month in December. China's consistently weak core inflation, which strips out volatile energy and food prices, reflects sluggish domestic demand growth due to the ongoing property downturn and stressed labor market, Goldman Sachs said in a research note. Tech and consumer services stocks led the session's losses. iFlytek lost 1.5% and Hangzhou Hikvision Digital Technology ended 1.4% lower. China Tourism Group Duty Free Corp. declined 1.5%. The benchmark Shanghai Composite Index closed 0.2% lower at 2881.98, the Shenzhen Composite Index declined 0.6% and the tech-heavy ChiNext Price Index fell 0.9%.

Hong Kong shares ended lower amid deepening concerns of deflation in China. Consumer prices in the world's second-largest economy fell for a third straight month in December, signaling continued weak domestic demand. The Hang Seng Index fell 0.35% to 16244.58, taking the stock benchmark 1.8% lower for the week. The Hang Seng Tech Index fell 0.9%. and Xiaomi lost 1.6% and 1.2%, respectively. Property stocks led losses, with Longfor Group dropping 4.7% and Country Garden Services down 3.1%. The energy sector rose. China Shenhua Energy gained 2.2% and Xinyi Solar was up 1.9%. China Aoyuan advanced 10.5% after the company made progress on its offshore-debt restructuring plan.

Japan's Nikkei Stock Average closed 1.5% higher at 35577.11, its fourth consecutive session gain and a fresh near 34-year high. The index gained 6.6% for the week, making it one of the top-performing markets so far this year. The session's gains were supported by conglomerates, with Marubeni closing 1.5% higher, Mitsui adding 2.2%, and Mitsubishi gaining 1.8%. Fast Retailing shares, whose first-quarter results beat street expectations, rose 6.3%. USD/JPY was down 0.1% at 145.12.

India's benchmark Sensex rose 1.2% to close at a record high of 72568.45 amid investor optimism spurred by solid 3Q FY 2024 results and earnings guidance from some of the country's major IT companies. Technology shares led gains, with Infosys jumping 7.8%, Tech Mahindra climbing 4.7%, and Tata Consultancy Services adding 3.9%. Meanwhile, Bajaj Finserv fell 1.05%, Power Grid Corp. of India shed 1.0% and UltraTech Cement was down 0.8%.


European markets rose, with defense and aerospace stock gains outweighing losses for airline and luxury-goods shares. The likes of Airbus, BAE Systems and Saab headed higher as investors pondered the implications for defense of rising Middle East tensions. Still, airlines lost height as air strikes on Houthi rebels in Yemen caused concern about travel disruption and higher fuel costs, should unrest in the region spread. Luxury shares fell as a Burberry profit warning fueled concerns about the industry's prospects in 2024, with Burberry shares dropping 5% and Kering, Christian Dior and others also retreating. The Stoxx Europe 600 rose 0.8% in closing trade, while the DAX and CAC 40 advanced around 1%.

The FTSE 100 closed up 0.6% Friday driven by defense and aerospace companies such as Rolls-Royce and BAE Systems after heightened tensions in the Middle East. "Rising oil prices following the bombing of Houthi military targets by the U.S. and U.K. in Yemen and a better-than-forecast expansion of month-on-month U.K. GDP growth helped the FTSE 100 to a positive close," IG analyst Axel Rudolph said in a note. Endeavour Mining was the session's highest performer, up 3.8%, followed by JD Sports Fashion and Fresnillo, up 3.8% and 3.05%, respectively. Burberry Group led the session's fallers, down 5.5%, followed by IAG, which fell 2.9% and Centrica, down 1.5%.

North America

The S&P 500 overcame big declines in airline stocks and shares of companies that rely on discretionary spending Friday to inch closer to a new all-time high.

The benchmark stock index ended Friday less than 0.1% higher, within 0.3% of a record high that has stood for more than two years. The tech-heavy Nasdaq Composite also added less than 0.1%. The Dow Jones Industrial Average declined 0.3%, or 118 points.

Each index still ended the week higher, after declining in the first week of January. Many analysts believe the market's January performance sets the tone for the rest of the year.

So far, the mood among investors is ho-hum despite stocks' march toward new highs.

"Our concern is with market valuations, especially right at record highs, when the economy is not as strong as it was," said Jerry Braakman, chief investment officer at First American Trust.

He said the Santa Ana, Calif. firm has trimmed its exposure to the technology stocks that drove last year's rally for fear that they have become too expensive relative to their forecast profits. It has built up positions in healthcare firms.

"That's a pretty defensive stance," Braakman said.

Cindy Beaulieu, chief investment officer for North America at money manager Conning, said markets became too ebullient after Federal Reserve Chairman Jerome Powell signaled in December that the central bank was finished raising interest rates.

Interest-rate futures indicate that investors believe that the Fed is likely to cut rates at its March meeting, according to CME Group. Events this week have led some to question whether that might be too soon for the central bank to reverse course.

The yield on the 10-year Treasury note ended at 3.949%, down from 3.974% on Thursday and a recent peak of 5% in October.

Labor Department data released Thursday hinted that inflation might not be cooling quite as quickly as some investors hoped. On Friday, traders woke up to news that a U.S.-led coalition launched strikes on Houthi rebel targets in Yemen in retaliation for the rebels' attacks on commercial ships in the Red Sea. Oil prices spiked in early trading, suggesting that the calm in energy markets that has helped ease inflation over the past year may not last.

"It's hard to have a lot of confidence in markets continuing to improve in 2024," Beaulieu said. "The forward looks that we're getting from these CEOs are not particularly supportive of equity markets that are going to make new highs."

Investors dumped airline stocks Friday after Delta Air Lines reduced its outlook for this year's bottom line. Chief Executive Ed Bastian cited geopolitical uncertainties, ongoing supply chain issues and volatile energy prices.

"To be prudent, we should set expectations a little bit lower and hope to overachieve," Bastian told investors on a conference call.

Delta shares fell 9% despite beating Wall Street's fourth-quarter sales and profit expectations. Only rivals United Airlines and American Airlines fared worse among S&P 500 constituents, losing 11% and 9.5% respectively. Southwest Airlines shed 4.3%.

Energy, communications, real estate and utilities were the top gaining segments of the S&P 500 on Friday.

Bank shares also had a mostly down day following earnings reports from four of the country's biggest lenders.

Citigroup swung to a loss in the fourth quarter and disclosed plans to cut 20,000 jobs. Its shares rose 1%.

Shares of Wells Fargo and Bank of America declined 3.3% and 1.1%, respectively. JPMorgan Chase slipped 0.7% after finishing out its most profitable year ever with $9.3 billion in fourth-quarter income.