Source : THE AGE NEWS
The Australian sharemarket was treading water on Wednesday, with gains by mining stocks offset by weaker energy stocks as oil dropped below the $US100-a-barrel mark on optimism that diplomatic efforts to end the US-Iran war are progressing.
The S&P/ASX 200 inched up 7.5 points, less than 0.1 per cent, to 8765.30, with eight of its 11 sectors in the red. The directionless session came after the ASX added 0.3 per cent on Tuesday, when Wall Street’s AI rally boosted the tech sector. The Australian dollar slipped 0.3 per cent to US70.96¢.
Mining stocks bolstered the local market. Copper powerhouses BHP and Rio Tinto finished up 1.4 per cent and 0.8 per cent, respectively, walking back some of their gains as copper prices retreated from near-record levels, as traders weighed the outlook for US interest rates amid shifting oil prices and comments from Federal Reserve officials. The US dollar has strengthened, weighing on metals priced in the currency, as expectations of more Fed tightening are increasing.
Gold producers also shone. Northern Star Resources climbed 4 per cent, Evolution Mining 2.2 per cent and Newmont 3 per cent as gold was trading at about $US4340 an ounce, erasing a moderate gain from the previous session.
Meanwhile, energy stocks struggled, with oil prices heading for the longest losing streak in more than a year, as Saudi Arabia moved to restart a key pipeline and the US flagged progress in talks with Iran to end a war that’s rocked the Middle East. West Texas Intermediate for November fell below $US90 a barrel after losing about 10 per cent over the previous five days, while Brent settled near $US99 on Tuesday and slid to $US98.46 by late afternoon AEST, dropping for a sixth day in a slump in which it has shed more than 9 per cent.
Local oil and gas giants Woodside and Santos were down 1.7 per cent and 1.5 per cent respectively, while refiners Ampol and Viva Energy shed 1.7 per cent and 1.6 per cent. Coal producers Yancoal (down 1.4 per cent) and Whitehaven (down 2.1 per cent) also declined.
President Donald Trump said US officials had “very good” talks with Iranian envoys in New York, reviving fragile hopes for a new diplomatic off-ramp hours after he again threatened to annihilate the country.
Trump said the three-hour session – held on the sidelines of the United Nations General Assembly gathering – was “very productive” and another was being planned for the near future. Iran has yet to comment on the meeting.
In the Middle East, Saudi Arabia aims to restore oil exports via its critical East-West pipeline in the coming days, enabling Riyadh to resume a bypass of the Strait of Hormuz. The conduit – which has the capacity to transport 7 million barrels a day – was damaged in attacks earlier this month.
Stocks depending on affordable fuel like airlines benefited. Qantas rose 2.1 per cent after its chief Vanessa Hudson said the airline was seeing strong bookings for the Australian summer travel season, and still expects to pay dividends despite rising jet fuel prices. Hudson talked to reporters while announcing the carrier’s Project Sunrise non-stop services that will connect Sydney to New York will start flying from mid-2028. Smaller rival Virgin Australia’s shares added 2.9 per cent.
Myer closed unchanged after soaring some 17 per cent during the session despite scrapping its dividend after losses widened in the past financial year by 35 per cent to $276.5 million. The second half of the year was “characterised by a volatile and significantly more challenging macroeconomic and retail environment”, the retailer said. Sales still rose 11.3 per cent to $4.1 billion.
The department store has appointed its biggest shareholder, billionaire rag trader Solomon Lew, to its board of directors. Myer purchased clothing chains Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E from Lew in a $950 million deal in October 2024, and at that time had invited Lew to the board. Lew, who also owns Peter Alexander and Smiggle, owns a 30 per cent stake of Myer.
It’s a victory lap of sorts for Lew, who served on the board of what was then Coles Myer for 17 years from 1985, including a stint as chair. He was kicked off the board in 2002 following a very public boardroom spat over conflicts of interest, as his private businesses were key suppliers to Coles Myer.
Tech stocks gave up some of their gains from Tuesday. Software makers WiseTech and Xero were down 1 per cent and 4.7 per cent respectively, while AI data centre operator NextDC rose another 1.5 per cent.
Financial stocks also weighed down the market. Of the big four banks, CBA and ANZ Bank were down 0.8 per cent and Westpac was down 0.4 per cent, while National Australia Bank edged up 0.1 per cent.
Insurance Australia Group’s shares fell 2.4 per cent after the competition watchdog blocked its planned takeover of RAC Insurance, saying the deal would lessen competition in the supply of car insurance and home and contents insurance in Western Australia.
IDP Education’s share price plunged 13.2 per cent to $1.88 after the education services provider revealed it had knocked back two unsolicited takeover bids by US buyout firm Blackstone, the latest sweetened to $2.50 a share, saying they “substantially undervalued” its business.
In US trading overnight, Wall Street held near its record high in a relatively quiet session. The S&P 500 closed flat and is sitting 0.4 per cent below its all-time high set last month. The Dow Jones Industrial Average lost 0.4 per cent and the Nasdaq composite advanced 0.5 per cent. The tech-heavy Nasdaq 100 climbed 0.8 per cent to close at a new high of 30,732, propelled by renewed AI-investing euphoria as traders rotated out of stocks they expect to be disrupted by the technology.
On the losing end of Wall Street were several stocks of companies in the oil and gas industry, which were hurt by the drop in crude prices. ConocoPhillips fell 1.8 per cent.
Banks also dropped, continuing their weak run since last week when the Fed raised the overnight interest rate that it controls for the first time in three years. When the spread narrows between short-term interest rates and longer ones, banks come under pressure because they make profit off the difference.
JPMorgan Chase fell 3.4 per cent and was one of the heaviest weights on the S&P 500.
The gap between short- and long-term yields in the bond market did not move much as the 10-year Treasury yield held steady at 4.96 per cent from late Monday. Like oil prices, it also remains far above where it was before the war with Iran began, when it was at 3.97 per cent.
In other international markets, indexes ticked higher across much of Europe and Asia. London’s FTSE 100 was an outlier and dipped 0.3 per cent.
Stocks rose 0.2 per cent in Hong Kong and 0.1 per cent in Shanghai after Alibaba unveiled new artificial intelligence chip technologies, including what it said was China’s most powerful AI chip. That comes just days ahead of a meeting between Chinese and US leaders at which competition to lead on AI technology is expected to be a major theme.
With AP, Bloomberg
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