ASX set for flat start, Wall Street rallies on falling oil prices; Amazon hits $US3tr valuation, Boeing jumps

US stocks surged closer to their all-time highs on Monday as falling oil prices eased concerns about worsening inflation, triggering a broad-based rally across major indices. The S&P 500 climbed 1.5 per cent, bringing it within 0.1 per cent of its previous peak recorded earlier this summer. This followed a volatile July marked by sharp fluctuations in oil prices due to tensions surrounding the conflict with Iran and other geopolitical uncertainties. The Dow Jones Industrial Average gained 1.3 per cent, while the Nasdaq Composite rose 2.1 per cent, reflecting optimism among investors. The Wall Street rally began the week on a positive note, buoyed by a 5 per cent drop in the price of a barrel of Brent crude to $83.52. Over the past month, Brent crude had fluctuated dramatically between $72 and $102 amid uncertainty regarding the impact of the conflict with Iran on the free movement of oil tankers through the Persian Gulf. The decision by President Donald Trump to delay new military actions against Iran, influenced by regional allies, contributed to a sense of relief in financial markets. This led to a decline in the yield on the 10-year Treasury note, which dropped to 4.68 per cent from 4.75 per cent on Friday, although it remained significantly higher than its pre-conflict level of 3.97 per cent. Despite the decline in Treasury yields, there are ongoing concerns about the potential negative effects of higher interest rates on economic activity. Higher yields can undermine stock prices and slow economic growth by increasing borrowing costs for both consumers and businesses. The average long-term US mortgage rate has already reached its highest level in a year, adding pressure to the housing market and potentially affecting consumer spending. The decrease in oil prices benefited sectors heavily reliant on fuel, such as airlines and cruise lines. United Airlines saw its shares rise 5.8 per cent, while American Airlines climbed 5 per cent. Norwegian Cruise Line Holdings posted a 6.6 per cent increase. Boeing's shares surged 8 per cent after US regulators approved the commercial operation of its new 737 MAX-7 aircraft, following extensive efforts to enhance pilot information systems and safety protocols. Technology stocks also performed strongly, with Amazon reaching an intraday high and gaining 4.6 per cent in value. The company became the fifth to achieve a market capitalization exceeding $3 trillion. Tyson Foods added 2.9 per cent after reporting better-than-expected quarterly profits, driven by continued demand in its chicken division and prepared food segments including Jimmy Dean and Hillshire Farm. The performance of large US corporations has been a key factor influencing Wall Street sentiment. According to FactSet, companies listed in the S&P 500 are projected to see a 47 per cent increase in earnings per share compared to the same period last year. More than half of these firms have already released their results, suggesting a robust recovery from the economic challenges posed by the pandemic. This trend mirrors the strong economic rebound observed during the spring of 2021. Positive economic indicators further supported investor confidence, with reports indicating that US manufacturing growth accelerated to its highest level since 2022. However, concerns persist regarding the sustainability of revenue growth in the semiconductor industry, particularly in light of the artificial intelligence boom. Uncertainty about whether AI will generate the anticipated levels of profitability and productivity continues to create volatility in chipmaker stocks. Investors remain cautious about the potential for reduced investment in data centers and related technologies if AI fails to meet expectations.