ASX set to rise as Wall Street surges; Oil prices fall; Road clears for Paramount-Warner Bros merger

US stocks are climbing with markets worldwide after oil prices and yields in the bond market gave back some of their jumps from last week.

The S&P 500 rose 1.5 per cent and pulled within 0.4 per cent of its all-time high set last month. The Dow Jones Industrial Average was up 348 points, or 0.7 per cent, in mid-afternoon trade, and the Nasdaq composite was 2.2 per cent higher.

The Australian sharemarket is set to rise, with futures at 4.52am AEST pointing to a gain of 36 points or 0.4 per cent, at the open. The ASX closed flat on Monday. The Australian dollar was steady at US71.22¢.

They got help from the price for a barrel of Brent oil falling 3.4 per cent to $US100.29. While that’s still much higher than its roughly $US72 price from earlier this summer, it’s down from the nearly $US110 it touched last week.

Oil prices are swinging up and down as some crude from the Middle East is able to sail through the Strait of Hormuz, though nowhere nearly as much as the industry and customers would like because of the war with Iran. Morgan Stanley’s Michael Wilson said another leg higher in prices for oil, gasoline and other refined products is the main risk he sees in the near term that could keep the US stock market from rising to his forecasted target for the year’s end.

The average price for a gallon of regular gasoline across the United States has already climbed to nearly $US4.48, according to AAA. That’s up from less than $US4.32 just a week earlier and from $US3.18 a year ago.

Monday’s pullback in oil prices helped lower the pressure coming from the bond market. The yield on the 10-year Treasury eased to 4.97 per cent from 5.01 per cent late Friday after it crossed above the 5 per cent threshold last week for the first time in three years.

Yields have been on the rise because of worries about inflation, big debt loads for governments worldwide and other factors. That hurts the economy because high yields make it more expensive not only for the US government to borrow money to pay its bills but also for households and businesses.

Worries remain about how much oil is available for customers worldwide, ING commodities strategists Ewa Manthey and Warren Patterson wrote in a commentary on Monday. However, they said profit-taking by investors after the recent jump in oil prices, together with hopes for constructive discussions at this week’s UN General Assembly and at a meeting between China’s and the United States’ leaders, helped improve optimism.

US Treasury Secretary Scott Bessent told reporters following talks Sunday with Chinese Vice Premier He Lifeng in New York that the US had “a very successful engagement” with the Chinese side. Bessent said talks with China touched on trade and AI. China and the United States have been discussing reciprocal tariff reductions on $US30 billion ($42.1 billion) worth of goods from each side.

In Beijing, China’s Foreign Ministry on Monday confirmed that Xi Jinping will pay a state visit to the United States between September 23 and 25. Experts and policymakers believe trade, tariffs, and AI safety are likely among the topics to be on the agenda.