ASX set to rise, Wall Street drops on strong GDP data

The Australian share market is expected to rebound today, even though Wall Street closed lower despite strong GDP data.

ASX SPI 200 futures were up 1.7 per cent to 6,822 by 8:00am AEDT.

It follows the benchmark ASX 200 index entering correction mode — defined as a 10 per cent or more drop in the index from its peak — on Thursday.

The Australian dollar was down 1.2 per cent overnight to 70.29 US cents.

In New York, it was another volatile day of trading as concerns over faster rate hikes grew following the release of strong GDP data. 

The benchmark S&P 500 gave up its early gains to close 0.5 per cent down at 4,326, the blue chip Dow Jones index was little changed at 34,160 and the Nasdaq Composite closed 1.4 per cent lower at 13,352.

Technology and banking were the strongest sectors on the top 500 companies index.

However, Intel lost 7 per cent and Tesla fell 11 per cent. The electric car maker expects supply chain issues to continue into 2023.

Netflix stocks jumped 7.7 per cent after news that billionaire investor William Ackman had bought a fresh $US1 billion stake in the company.

Fourth-quarter GDP in the US showed growth of 6.9 per cent, which was mostly attributed to businesses replenishing stock to meet strong demand for goods.

Annually the US economy grew 5.7 per cent, which is the strongest lift since 1984. It followed the government providing nearly $US6 trillion in pandemic relief.

In 2020 GDP went backwards by 3.4 per cent, the biggest drop in 74 years.

The growth supports potential moves by the Federal Reserve to lift interest rates soon, likely as early as March, and aggressively, which has spooked global markets this week.

Analysts expect the US economy to slow in the first three months of 2022.

"While Omicron will lead to weaker growth in the first quarter, activity is expected to rebound nicely once the latest pandemic wave abates and supply chain glitches ease," said Sal Guatieri, senior economist at BMO Capital Markets.

"The Fed will need to be 'humble and nimble' as it navigates underlying economic strength, worsening labour shortages, and stubbornly high inflation."

In other positive signs for the US economy, weekly jobless claims fell by 30,000 to 260,000.

On oil markets, Brent crude was down 0.8 per cent, to $US89.25 per barrel, while West Texas crude was down 1 per cent to $US86.47 per barrel. 

Spot gold was down 2 per cent to $US1,793.60 per ounce.

Iron ore rose 0.5 per cent overnight to $US138.75 per tonne.

European stocks bucked the US trend and ended trading higher on Thursday after a choppy day of trading.

The pan-European STOXX 600 index closed 0.6 per cent higher, Germany’s DAX rose 0.4 per cent, while Britain's FTSE gained 1.1 per cent.

ABC/Reuters