Source : THE AGE NEWS
The Australian sharemarket ticked higher in Thursday’s session, tracking a recovery on Wall Street as pressure from the bond market eased after the US Treasury unveiled plans to buy back longer-dated debt to curb borrowing costs.
The S&P/ASX 200 finished up 30 points, or 0.3 per cent, at 9083.80, having fallen for six straight sessions. Five of its 11 industry sectors were stronger, led by gold miners, healthcare and tech stocks. The Australian dollar slipped to US71.21¢.
It was another busy reporting season day, with Fortescue and Northern Star among companies revealing results. Investor focus was also on the latest labour market data. The ASX stayed in the green after a report showed the nation’s unemployment rate unexpectedly rose in July, easing some economists’ expectations for more interest rate hikes by the Reserve Bank.
Australia’s jobless rate climbed to 4.5 per cent last month, surpassing economists’ estimate for it to remain unchanged at 4.4 per cent, data from the Australian Bureau of Statistics showed. The economy shed 15,800 jobs — driven by part-time roles — compared with a predicted 12,000 increase.
“This is the highest unemployment rate we’ve had in nearly five years — making September a very unlikely time for the RBA to deliver a rate hike,” said Andrew Lilley, chief rates strategist at Barrenjoey Markets.
Miners paced the market’s gains, with gold miners rallying after bullion held the biggest gain in six months after the US Treasury’s surprise move to rein in long-term borrowing costs. Gold was trading above $US4500 an ounce after surging more than 4 per cent on Wednesday.
The US Treasury unexpectedly announced it would ramp up buybacks of long-dated government debt, signalling it wants to lower borrowing costs after yields hit multi-decade highs. Gold has been volatile in recent weeks amid fears inflation fuelled by the Iran war might force the Federal Reserve to raise interest rates.
Northern Star Resources rallied 6.2 per cent, also after showing how it benefited from gold’s record highs this year. Its net income soared 24 per cent to $1.7 billion in the year to June 30, the miner said, thanks to a 26 per cent rise in the average price it was able to fetch for its gold. Rivals Evolution Mining and Newmont jumped 10.2 per cent and 6.9 per cent, respectively.
Iron ore producer Fortescue slipped 0.6 per cent after saying its full-year profit fell despite buoyant iron ore prices as China’s property slowdown and negotiations with the country’s state-backed buyer dragged on. The miner posted a net profit of $US2.9 billion ($4.1 billion) for the 12 months to June 30, down 15 per cent on the year before.
The results conclude a challenging year for Fortescue, which is in active negotiations with China’s state-backed iron ore buyer. China Mineral Resources Group has imposed restrictions on shipments of Super Special Fines, a cheaper low-grade ore that is one of Fortescue’s key exports.
Its bigger rivals BHP and Rio Tinto gained, rising 3.2 per cent and 1.8 per cent, respectively. The US bond intervention lent support to copper, their key growth metal, holding it above $US14,000 a tonne.
Tech stocks also gained, shrugging off falls by Big Tech stocks on Wall Street overnight. Software makers Xero and WiseTech – which slumped almost 9 per cent on Wednesday after the competition watchdog executed a search warrant on its offices – were up 2.4 per cent and 9.1 per cent. Communications and metal detection tech firm Codan soared 12.4 per cent after reporting a 69 per cent profit jump and raising its dividend by 70 per cent.
Another 2.8 per cent jump by CSL lead healthcare stocks higher following the blood giant’s forecast earlier this week of a return to profit growth this year. ProMedicus shares rose 3.6 per cent and ResMed rose 2.8 per cent.
Financial stocks were trading lower, with all big four banks finishing down. CBA lost 2.7 per cent, National Australia Bank slipped 1.3 per cent, Westpac shed 1.8 per cent each and ANZ dropped 1.6 per cent.
Property giant Goodman Group slipped 1.5 per cent even after it said the boom in demand for data centres from AI and cloud computing, networking, and storage hyperscalers gave it a 15.7 per cent jump in full-year operating profit to $2.67 billion. “Automation and robotics continue to drive logistics requirements while scarcity of power and land remains the key constraint on AI and cloud growth supporting data centre demand,” chief executive Greg Goodman said.
Super Retail Group rallied 15.1 per cent after posting a $206 million full-year profit, down 7.2 per cent but better than analysts expected. The operator of Rebel, Macpac and Supercheap Auto said it had a positive start to the new financial year, with sales up 3.5 per cent in the first seven weeks, although the fuel crisis, rising interest rates, inflation and pressure on housing markets were “creating uncertainty around the outlook for 2027”.
On Wall Street overnight, US stocks rose after the Treasury Department announced a move that could ease pressure coming from the bond market. Strong profit reports for the spring from Estée Lauder, Target and other US companies also helped support sentiment.
The S&P 500 climbed 0.2 per cent for its first gain in four days after setting its all-time high last week. The Dow Jones Industrial Average added 0.2 per cent, and the Nasdaq composite ticked 0.2 per cent higher.
Financial markets have come under growing strain as bond yields charged higher in recent months on worries about inflation, big government debts and other factors. That makes borrowing money more expensive for everyone, which slows the economy and undercuts prices for stocks and other investments.
But Treasury yields fell in the morning after the Treasury Department said it will at least double the size of its planned purchases of longer-term Treasurys from September 9 through November 4. The department said it’s doing so “to provide greater liquidity support in longer-dated nominal sectors where there is consistent strong sponsorship from market participants.”
These longer-term 10- and 30-year Treasurys are less beholden to the Federal Reserve, which can raise or lower very short-term interest rates for overnight loans. President Donald Trump has lobbied for the Fed to lower interest rates to help the economy.
Longer-term yields are set instead by investors in the bond market, who decide how much interest they need to get paid by the US government in exchange for lending it money. And recently, they have been demanding more in interest to make up for the growing risks of high inflation, continued government deficits and other factors.
After the Treasury department’s announcement, the yield on the 10-year Treasury fell to 4.64 per cent from 4.71 per cent late Tuesday. It, though, remains well above its 3.97 per cent level from before the war with Iran sent oil prices and worries about inflation much higher.
The 30-year Treasury yield, which recently touched its highest level since 2007, fell more sharply to 5.18 per cent from 5.28 per cent late Tuesday.
The relief could be short-lived, some analysts warn, with the value of bonds the US Treasury is proposing to repurchase just a fraction of the overall total.
“The boost to buybacks is also happening in a world of challenged Fed credibility,” according to strategists at BNP Paribas. Investors are questioning whether the Federal Reserve will raise the federal funds rate soon to match the tough talk its chairman, Kevin Warsh, has been offering on getting inflation down toward its 2 per cent target.
“We do not believe buybacks will be enough to offset a continued loss in Fed credibility,” the BNP Paribas strategists wrote in a report, calling them “necessary, but not sufficient.”
On Wall Street, Moderna and Merck helped lead the market after they announced encouraging initial results from a study of a cancer vaccine they co-developed. The new drug showed better recurrence-free survival in melanoma patients who had a combination of it and Keytruda, a prescription immunotherapy drug made by Merck, than with Keytruda alone.
Moderna soared 177 per cent, while Merck jumped 12.6 per cent.
The continuing parade of US companies reporting bigger profits than analysts expected, meanwhile, continues to support stocks.
Estée Lauder rallied 16.3 per cent after CEO Stéphane de La Faverie said a key measure of its revenue growth accelerated for a fourth straight quarter.
Target rose 4.3 per cent, Lowe’s added 2 per cent and home builder Toll Brothers climbed 4 per cent after they all reported better profits for the latest quarter than expected.
In other international markets, indexes were mostly lower in Asia and mixed in Europe. Tokyo’s Nikkei 225 sank 3.2 per cent. South Korea’s Kospi, which has been home to some of the world’s sharpest swings because of its heavy reliance on AI stocks, slumped 5.8 per cent.
with AP and Bloomberg
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