Welcome to your five-minute recap of the trading day, and how the experts saw it.
The numbers
The Australian sharemarket rallied to a three-month high, led by sharp gains in interest-rate-sensitive tech stocks.
Wall Street was off to a mixed start this week. Credit: Reuters
The S&P/ASX200 rose 33.9 points, or 0.73 per cent, to 7232.9 at the close, following a lacklustre start to trading on Tuesday morning. The ASX was flat on Monday.
The lifters
There were gains across all 11 sectors, except mining stocks, which ended the day unchanged. The rise came despite National Australia Bank’s monthly business survey showing confidence in November fell 6 points to 9 index points, with falls in most industries. Trend confidence was negative across the board in every state. Business conditions fell 5 points to 9 index points.
“Outside of the pandemic period, business confidence is now its weakest since around 2012, when conditions were significantly weaker and growth in advanced economies was slowing,” NAB chief economist Alan Oster said.
The Westpac-Melbourne Institute Consumer sentiment index for December was up 2.7 per cent, but “still very weak”. “The gloom that deepened last month has lifted slightly heading into year-end, but consumers remain far from upbeat,” Westpac senior economist Matthew Hassan said.
Technology stocks buoyed the local bourse on Tuesday, climbing 2.1 per cent. WiseTech lifted 2.9 per cent, Xero soared 3.8 per cent, NEXTDC was up 0.9 per cent, and Altium rose 1.3 per cent.
Real estate investment trusts advanced 1.1 per cent, while consumer staples rose 1.4 per cent.
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Qube Holdings and REA Group also recorded strong gains, lifting 2.6 per cent and 2.6 per cent.
The laggards
Mining stocks were the worst performing sector after they finished the day unchanged. BHP edged up 0.04 per cent, Fortescue was up 1.6 per cent, Newmont Corporation rose 0.1 per cent, offsetting the losses from Rio Tinto (down 0.3 per cent), South32 (down 1.3 per cent) and Pilbara Minerals (down 2.8 per cent).
Lynas Rare Earths finished the day as the weakest large-cap stock, with shares tumbling 4.6 per cent. IDP Education crashed 4.3 per cent, EBOS Group fell 4 per cent, and IGO was down 3.9 per cent.
Oil steadied just above a five-month low with oversupply concerns in focus after OPEC+ pledges to extend and deepen output cuts failed to halt a slump in prices. Brent traded around $US76 a barrel after rising 2.7 per cent over the prior two sessions.
The energy sector was the second-weakest on the local index, trading 0.2 per cent higher. Woodside and Santos shares both lifted 0.3 per cent.
The lowdown
Australian Eagle Asset Management chief investment officer Sean Sequeira said the market was buoyed by tech and healthcare stocks, which are growing their earnings or receiving higher valuations from investors.
“Those companies performed relatively better than that of the rest of the market,” Sequeira said. “Further, you had some indication the market was trading on a forecast of lower long-term interest rates.”
Overnight on Wall Street, the S&P 500 rose 0.4 per cent after drifting between small gains and losses in the early going. The benchmark index finished at its highest level in 20 months.
The Dow Jones also added 0.4 per cent, while the Nasdaq composite finished 0.2 per cent higher.
The gains were broad among S&P 500 stocks, with technology, financial and health care among the big winners. Communications services stocks were the only laggard.
Cigna surged 16.7 per cent for the biggest gain among S&P 500 stocks after the health insurer announced a $US10 billion ($15.2 billion) stock buyback, and The Wall Street Journal reported that the company is no longer pursuing a merger with Humana.
Macy’s jumped 19.4 per cent following reports that an investor group is launching a bid to take the storied retailer private for $US5.8 billion.
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The latest market gains, while muted, follow a six-week winning streak by the major stock indexes. The S&P 500 is up 20.4 per cent for the year and the Nasdaq is up 37.9 per cent.
Wall Street’s big focus this week will be updates on inflation at the consumer and wholesale levels, along with the Fed’s latest update on its interest rate policy.
Wall Street is overwhelmingly betting that the Fed will keep its benchmark interest rate at a range of 5.25 per cent to 5.50 per cent into early 2024 and could start cutting rates by the middle of that year. Analysts are also becoming more comfortable with the possibility that the central bank can pull off a “soft landing,” which refers to inflation easing under high interest rates without the economy falling into a recession.
“With inflation coming down faster than expected, it now appears likely that the Fed will refrain from additional rate hikes,” said Brian Rose, senior U.S. economist at UBS, in a note to investors. “At the same time, inflation is still too high and the labor market is still too tight for the Fed to consider cutting rates soon.”
Tweet of the day
Quote of the day
Reserve Bank Governor Michele Bullock on Tuesday rejected the suggestion Australia was behind the rest of the world in the fight against inflation. “I don’t think we’re falling behind at all,” she said at the Australian Payments Network Summit. “I think we are trying to make sure that we slow the economy enough to bring inflation down to our target band.”
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