Source : THE AGE NEWS
By Hannah Kennelly
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket closed higher on Monday, as markets brace for the impact of President-elect Donald Trump’s return to the White House.
The S&P/ASX 200 climbed 37 points or 0.45 per cent, to 8347.40 points at the close, with 10 out of 11 industry sectors trading in the green. The Australian dollar made minor gains, and traded at US62.12¢ at 4.15pm AEDT.
Wall Street closed its best week since Donald Trump’s election win with more gains.Credit: AP
The lifters
Materials were one of the best-performing sectors, with mining heavyweights BHP and Rio Tinto jumping 0.5 per cent and 1.1 per cent. The real estate sector continued its strong streak with shopping centre owners Scentre, Stockland and Vicinity up 1.4 per cent, 0.6 per cent and 0.5 per cent respectively.
Tabcorp was one of the biggest advancers on the ASX on Monday, climbing 6.3 per cent, while the four big banks had a solid day. Commonwealth Bank (up 0.8 per cent), NAB (up 0.8 per cent), Westpac and ANZ (both up 0.4 per cent) all recorded gains.
Santos climbed 0.6 per cent, however, Woodside Energy and Ampol dropped 0.6 per cent and 0.4 per cent respectively. Ampol on Monday announced two appointments to its board: a former executive director of Fortescue, Stephen Pearce, and Helen Nash, who currently chairs Inghams Group.
The laggards
Meanwhile, ailing casino operator Star Entertainment plummeted 17.9 per cent after the company reported a sharp slide in revenue on Monday. In an ASX statement, the group told shareholders its ability to continue operating was in question unless it could find a new source of funding.
“The group’s capacity to raise $150 million of subordinated debt is limited in the short term in the absence of additional liquidity solutions … there remains material uncertainty as to the group’s ability to continue as a going concern,” the statement said.
Biotech giant CSL (down 0.2 per cent) pushed the healthcare sector lower, although software medical imaging company Pro Medicus was up 3.9 per cent.
The lowdown
On Tuesday 4am AEDT, Donald Trump will become the 47th President of the United States. T Rowe Price capital markets strategist Tim Murray said Trump’s second term could impact smaller stocks.
“Small-cap stocks may benefit from reduced regulatory burdens and potential corporate tax cuts, though scepticism remains about further tax cuts due to the federal budget deficit,” he said. “However, a lot of optimism is already priced in. Given that equity valuations are very rich, a partial reversal could be on the horizon if elevated U.S. earnings expectations are not met in 2025.”
However, Murray said Trump’s policies carry the risk of reigniting inflation concerns.
“Despite the broadly held view by economists that higher tariffs and tighter immigration policies are bad for the U.S. economy, economic growth expectations have been on the rise,” he said.
“This is because of expectations that there may be significant pent-up economic activity released now that election uncertainty has been removed. Additionally, many business owners—particularly owners of small businesses—have become more optimistic about future business conditions, as Republicans typically enact more business-friendly policies than Democrats…”
On Wall Street on Friday, the most forceful pushes upward came from Big Tech stocks. All the companies in what’s come to be known as the “Magnificent Seven” rose: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Because they’re so massive in size, their movements carry more weight on the S&P 500 and other indexes than other stocks.
The Magnificent Seven have been under pressure recently because of criticism their stock prices may have shot too high after leading the market for so many years. Such worries grew after Treasury yields jumped in the bond market. Higher yields hurt prices for all kinds of investments, particularly those seen as the most expensive.
But stocks broadly got a lift last week from an encouraging report on US inflation, which raised hopes that the Federal Reserve may deliver more cuts to interest rates this year. More such cuts, which began in September, would ease the brakes off the economy and boost prices for investments, although they can also give inflation more fuel.
Wall Street has been lurching down and up in recent weeks as economic reports pushed traders to revamp their expectations about what the Fed will do with rates. Lower worries about inflation have sent Treasury yields down and stocks up, while worsening worries about inflation have triggered the opposite reaction.
Tweet of the day
Quote of the day
“We’re in the midst of a billionaire boom. The number of Australians with wealth of $US1 billion or more has jumped by 52 per cent since 2020, new analysis says. That means we’ve added a new one every three months for the past four years.”
Read more of Matt Wade’s piece here.
You might have missed
Donald Trump’s inauguration and expectations of the tumult he will release on day one of his administration have deflected attention from the emergence of a familiar threat to US economic and financial stability: a breach of its absurd debt ceiling.
The breach of the $US36.1 trillion ($58.2 trillion) ceiling on what the US government can borrow will be temporarily averted when US Treasury begins taking “extraordinary measures” – initially suspending contributions to federal retirement funds while redeeming some contributions – on Tuesday, a day after the inauguration.
Read more of Stephen Bartholomeusz’s opinion piece here.
With AP
