Source : the age
The Australian sharemarket reversed early losses and posted a solid gain after data showed inflation was weaker than expected in April, supporting the case for the Reserve Bank to leave interest rates unchanged next month.
The S&P/ASX200 rose 59.90 points, or 0.7 per cent, to 8717.70. All 11 industry sectors finished in the green bar communications stocks, with rate-sensitive sectors such as technology, retail stocks and property trusts pacing the gains. The local bourse slipped 0.4 per cent on Tuesday following US strikes on Iranian vessels in the Strait of Hormuz and other targets.
Inflation has eased from a three-year high as the government’s cut to petrol excise reduced cost-of-living pressure. The Australian Bureau of Statistics said inflation fell to 4.2 per cent in April, after spiking to 4.6 per cent in March. That was less than the 4.4 per cent predicted by economists.
The closely watched trimmed mean gauge of annual consumer-price growth, which shaves off volatile items, accelerated to 3.4 per cent, in line with estimates. The reading eased concerns the RBA will deliver a fourth rate rise next month. The Australian dollar and government bond yields declined. The Australian dollar traded at US71.48¢ in late afternoon, down 0.3 per cent.
“For the RBA, June is now unquestionably off the table,” said Robert Thompson, head of economics and strategy at RBC Capital Markets, pushing back his call for the next rise to August. “It’s a game of fine margins now though.”
Interest-rate sensitive and capital-intensive sectors, such as IT and real estate, led the gains on optimism that a rate reprieve would keep borrowing costs unchanged, and leave business and consumers with more money to spend. Unchanged rates will also keep interest payments on government bonds flat, which means they don’t become more attractive as investments in comparison to property trusts.
In technology, software concern WiseTech Global rose 1.4 per cent, while Xero ended unchanged. Data centre operator NextDC climbed 3.8 per cent and Megaport jumped 8.6 per cent. In property, AI data centre and warehouse giant Goodman Group rose 3.7 per cent and Westfield shopping centres landlord Scentre added 1.1 per cent.
Stocks dependent on discretionary consumer spending also advanced. Bunnings and Kmart owner Wesfarmers rose 1.4 per cent, pokies maker Aristocrat jumped 3.2 per cent, electronics retailer JB Hi-Fi rose 1.2 per cent and furniture seller Harvey Norman gained 2.5 per cent.
Materials finished stronger as copper climbed and aluminium was on track for its highest close in four years on cautious optimism that the US and Iran could reach a peace deal, despite this week’s fresh flare-up of hostilities in the Persian Gulf. BHP rose 1.5 per cent, South32 gained 3.5 per cent and BlueScope Steel added 1.1 per cent.
KMD Brands soared 17.3 per cent after the owner of outdoor wear retailer Kathmandu and surf brand Rip Curl reported 6.6 per cent sales growth for the first nine months of its financial year, said it was on track for $27.5 million in cost savings for the full year and that it had started a “comprehensive business review” of its capital structure and portfolio to boost shareholder returns.
Shares of Southern Cross Media jumped 7.8 per cent after Australia’s richest person, Gina Rinehart, emerged as the money behind former Kerry Stokes ally Bruce McWilliam’s near-10 per cent stake in the media group, which owns Network Seven and Triple M.
On the flipside, the sell-down in ASX Ltd shares continued, with the stock slumping another 9.7 per cent. The embattled stock exchange operator had dived 13.3 per cent on Wednesday after flagging it would increase its capital spending to as much as $200 million in the new financial year to upgrade critical market infrastructure.
Energy stocks were mixed, as oil dropped on optimism that the US and Iran will reach a peace deal despite the fresh hostilities. Brent fell to near $US98 a barrel after rising almost 4 per cent on Tuesday, while West Texas Intermediate was around $US92. US Secretary of State Marco Rubio has cautioned that any peace pact would most likely take a few days to finalise.
Oil and gas giant Woodside was flat, Santos edged up 0.3 per cent and refiners Ampol and Viva Energy slipped 0.1 per cent and 0.5 per cent, respectively. The energy sector as a whole was held up by a strong performance from coal producers Yancoal (up 2.1 per cent) and Whitehaven Coal (up 2.2 per cent).
On Wall Street overnight, the US sharemarket rose to records as it caught up with climbs for others around the world from the day before, when US President Donald Trump said negotiations were “proceeding nicely” with Iran on ending their war.
The S&P500 climbed 0.6 per cent after trading resumed following Monday’s holiday and set an all-time high. The Nasdaq composite rallied 1.2 per cent to set its own record, while the Dow Jones Industrial Average dipped 118 points, or 0.2 per cent, from its all-time high.
