Source : the age
Australia’s share market has ended a volatile week higher, following five wild sessions of earnings, oil price swings and interest rate woes.
The S&P/ASX200 rose 54.1 points on Friday, up 0.6 per cent, to 9092.3, as the broader All Ordinaries advanced by 51 points, or 0.55 per cent, to 9294.2.
The top-200 rose 0.37 per cent since Monday, following a sharp midweek sell down after July’s hot inflation print increased the odds of further interest rate hikes.
Resources stocks outperformed the broader market on the back of strong commodity prices, while consumer staples also supported the exchange after solid financial results from Coles and Woolies.
Earnings season so far had delivered total estimated profit growth of 11.6 per cent after three financial years of falls, AMP deputy chief economist Diana Mousina said.
“The negative is that the improvement is narrowly based. Take out mining and energy and its more like 5.3 per cent,” Ms Mousina said.
About 36 per cent of earnings have beaten expectations, lower than the usual 40 per cent, with more results being “in line” with expectations.
“Australian shares lagged and were basically flat over the week as domestic profit growth just can’t compete with blockbuster US outcomes and on signs that another RBA rate hike may come sooner than expected,” Ms Mousina said.
Financials stocks staged a 0.8 per cent rebound on Friday, but ultimately clocked a third-straight week of losses, falling almost a tenth since mid-August as mortgage market concerns mount.
The energy segment finished strong but retreated 1.4 per cent over the week as crude prices softened, as shipping traffic in the Hormuz Strait picked up despite an ongoing US-Iran stalemate.
Consumer discretionary stocks fell for a third week as well, punctuated by decent sales results from Harvey Norman, despite a major drop in foot traffic.
Virgin Australia defied disruptions to its Middle East services to hand down a $501 million full-year statutory net profit, up 4.7 per cent, but that didn’t stop its share price from easing on Friday.
The Australian dollar is buying 71.99 US cents, up from 71.84 US cents on Thursday at 5pm AEST.
With earnings season winding down, the local focus is shifting to the macroeconomic outlook, with GDP data due next week and economists divided on when the next interest rate hike will come.
“Strong GDP and/or employment reports could tip the RBA into raising rates next month, but it still seems more likely November will be the next window of opportunity following release of the September quarter CPI in late October,” Betashares chief economist David Bassanese said.
Overnight in the US, the S&P 500 rose 0.7 per cent and pulled closer to its all-time high set earlier this month. The Dow Jones added 105 points, or 0.2 per cent, and the Nasdaq composite climbed 1.6 per cent.
On Wall Street, Nvidia was the strongest force pulling the market higher, and the chip giant rallied 8.7 per cent after once again delivering stronger profit and revenue for the latest quarter than analysts expected. More importantly for Wall Street, it also gave forecasts for coming revenue growth that topped analysts’ estimates, suggesting demand remains strong for chips to power artificial-intelligence projects.
“AI has reached its inflection point,” Nvidia chief executive Jensen Huang said. “It’s doing useful work. Its tokens are productive and profitable.”
That helped calm some of the worries that have built around AI stocks generally, which have been under pressure recently. After rocketing higher for years because of the frenzy around AI, stocks in the industry are confronting scepticism that they shot too high and that booming demand for AI chips may fade if the AI revolution does not produce as much profit as promised.
Elsewhere, though, trends were more mixed across big US companies, and the majority of stocks within the S&P 500 fell.
The yield on the 10-year Treasury rose to 4.67 per cent from 4.66 per cent late on Wednesday.
Yields have been largely climbing through the summer on worries about high inflation, the US government’s gargantuan and growing debt and other factors. They got so high that the US Treasury Department made a surprise announcement last week to intervene in the bond market, though analysts say its effect could be limited.
The next big event for the bond market will be a speech coming on Friday from Warsh. He has been adamant about giving financial markets fewer clues about what the Fed will do in future with interest rates to control inflation. But the pressure is on him to give clearer guidance.
