HSBC’s central forecast is that the Reserve Bank of Australia will remain on hold for the rest of the year and might start cutting rates early next year.

“That said, we see a 40 per cent chance that the RBA could raise its cash rate again in [the second half of 2024] and a risk that the cash rate is on hold for longer than our central case, partly depending on actions by the US Fed.”

Overnight, US stocks climbed to trim the majority of their losses for the week.

The S&P 500 rose 0.9 per cent, which more than halved its drop for the week. The Dow Jones rose 0.9 per cent and the Nasdaq composite jumped 1.5 per cent.

After the close, Apple disclosed its steepest quarterly decline in iPhone sales since the pandemic’s outset, deepening a slump that’s increasing the pressure on the trendsetting company to spruce up its products with more artificial intelligence.

But the company committed to spending $US110 billion ($168 billion) buying back its own stock, a move that investors cheered but may fuel criticism that Apple is spending more money catering to Wall Street than creating more innovative products. Shares were up 6 per cent at 8.34am AEST in after-hours trading.

In the bond market, Treasury yields eased ahead of a report on Friday from the US government on how many jobs employers added last month. It’s one of the most highly anticipated economic reports each month, and economists expect it to show a slowdown in hiring.

Loading

“The markets will be hungry for any data suggesting the economy isn’t heating up any more than it did in [the first three months of 2024],” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley. That would give the Fed more leeway to consider cutting rates.

Earnings reports from several big companies helped drive the market higher. Qualcomm rose 9.7 per cent after topping forecasts for profit and revenue in the latest quarter. The tech company also gave forecasted ranges for upcoming revenue and profit whose midpoints topped analysts’ expectations.

They helped to offset a 15.1 per cent drop for Etsy, which only roughly matched analysts’ expectations for results and revenue. It cited a “still challenging” environment where customers broadly are more selective about the non-essentials they’re buying.

DoorDash sank 10.3 per cent after reporting a worse loss than expected. The company, which has been spending more on personnel and research and development, also gave a forecasted range for underlying earning trends in the current quarter whose midpoint fell short of analysts’ expectations.

Peloton Interactive swung from an early gain to a loss of 2.8 per cent after it said it would cut roughly 400 jobs as part of a program to save $US200 million in costs annually. It also said its CEO, Barry McCarthy, is stepping down. The company’s stock had fallen to a record low last week.

In the bond market, which has been helping to dictate much of the stock market’s movements recently, yields fell following some economic reports.

One showed that fewer US workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains solid despite high interest rates.

A separate, potentially more disappointing report suggested growth in how much US workers produced per hour worked was weaker at the start of 2024 than economists expected. A measure comparing labor costs to productivity, meanwhile, rose by more than expected in the preliminary report. That could put upward pressure on inflation.

Loading

The economy is in a tight spot, where the hope is that it remains strong enough to stay out of a recession but not so strong that it worsens the already stalled progress on inflation.

Stubbornly high readings on inflation this year are what pushed Federal Reserve Chair Jerome Powell to say on Wednesday that it will likely take “longer than previously expected” to get enough confidence about inflation to cut interest rates.

The Fed’s main interest rate has been sitting at its highest level since 2001, and cuts would release some pressure on the economy and financial markets.