The Australian stock market is poised for a strong open on Friday, with SPI futures indicating a 0.86% gain, as a tech rally on Wall Street provides a powerful tailwind. The ASX 200, which closed Thursday at 8,967.7, is on track to erase its 0.78% loss from the previous session. If the futures gain holds through the close, the index could approach 9,045, pushing its July return to around 3.03%.
The optimism stems from a surge in US technology stocks, led by Microsoft (NASDAQ: MSFT), which jumped over 15% after reporting a better-than-expected cloud forecast and lighter capital expenditure. The US tech sector rose 5.2%, with the semiconductor index climbing 8.2%. This has boosted sentiment for Australian tech stocks, with WiseTech Global (ASX: WTC), Xero (ASX: XRO), and TechnologyOne (ASX: TNE) all expected to benefit from the offshore momentum.
However, market breadth remains a concern. On Thursday, only 53 stocks in the ASX 300 rose, while 231 declined. The tech sector gained 0.91%, but materials dropped 1.59% and financials slipped 0.37%. A rally led solely by tech may struggle to sustain momentum if other sectors do not participate. Key indicators will be the performance of major financial and resources stocks, including Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB), BHP Group (ASX: BHP), and Rio Tinto (ASX: RIO).
Rio Tinto provided a positive catalyst, reporting a 43% rise in first-half underlying earnings to $6.85 billion, with copper and aluminium now accounting for 56% of total profits, surpassing iron ore for the first time. Rio shares rose 1.83% on Thursday, while BHP fell 1.71%.
On the data front, Australian producer prices and private credit figures are due at 11:30 AEST, which will offer insights into upstream inflation and credit trends. The Reserve Bank of Australia's cash rate remains at 4.35%, with its next policy decision scheduled for August 11. Headline inflation eased to 3.8% in June, while the trimmed-mean measure held at 3.6%.
Energy stocks face a mixed outlook. Brent crude closed down 1.88% at $89.03, and US crude fell 1.03% to $83.59. However, geopolitical risks in the Middle East may continue to support Woodside Energy (ASX: WDS) and Santos (ASX: STO).
Overall, the market's ability to broaden beyond tech will be crucial for sustaining the rally. Investors will watch for confirmation from financial and resources sectors, as well as the upcoming data releases, to gauge the health of the Australian economy.
