Source : THE AGE NEWS
The Australian sharemarket whipsawed on Wednesday, opening higher, then dipping into the red after hawkish Reserve Bank comments before finishing in the green. Banks and tech stocks advanced, with a 41.7 per cent plunge by data operator centre NextDC the notable exception.
The S&P/ASX 200 closed up 14.4 points, or 0.2 per cent, at 8831.30, with eight of its 11 industry sectors in positive territory. The Australian dollar was stronger at US70.15¢.
Stocks wavered in the morning and turned south after RBA Deputy Governor Andrew Hauser said Australia’s inflation outlook looked “materially worse” than the central bank predicted in August, citing higher oil and technology prices and persistent domestic price pressures.
“We’re seeing higher AI prices, tech prices feeding through into CPI,” Hauser said during a fireside chat on Wednesday, responding to a question about the prospects for a rate hike at the RBA’s policy meeting in early November. Oil prices are about a third higher than the RBA had assumed, with fewer fiscal interventions cushioning the impact on consumers, he added.
Traders priced about a 43 per cent chance of a rate hike at the end of the RBA’s two-day meeting on November 3, up from about 30 per cent before Hauser’s comments, according to swaps data compiled by Bloomberg. A 25 basis point rate hike is all but fully priced for February, brought forward from expectations it may occur in May, the data show.
Hauser “sounds very uncomfortable about how [third-quarter] inflation is shaping up,” said Sean Callow, a senior analyst at ITC Markets in Sydney. “Hauser may be again playing ‘bad cop’ in delivering a warning that another rate hike is looming.”
The inflation comments came on top of NextDC’s shock profit warning, which had already weighed down the market. Australia’s biggest data centre operator tanked as much as 45 per cent after it came out of a trading halt slashing its sales and profit forecasts for the year.
NextDC blamed delays with its controversial M3 data centre expansion in Melbourne, due to community resistance to the power grid upgrade, with concerns about noise, emissions and massive power poles close to their homes, for the earnings downgrade. The company is looking at “capital recycling opportunities” including the sale of development sites to help it weather the crunch.
Data centre landlord Goodman Group fell 2.2 per cent, pulling down the property sector, while mining stocks also struggled.
Copper heavyweights BHP and Rio Tinto extended their declines from Tuesday, when BHP said its copper production in the latest quarter had slumped by almost 20 per cent as key mines in Chile were affected by weather and lower-quality ore. BHP shares lost another 1.6 per cent, while Rio dropped 1.5 per cent. Fortescue finished flat. Gold miners Evolution and Newmont fell 1.6 per cent and 1.9 per cent, while Northern Star, which is being eyed for a takeover by South Africa’s Gold Fields, rose 1.8 per cent on the back of a trading update.
But the key financial sector, which accounts for more than a third of the ASX, advanced, limiting the bourse’s losses. All Big Four banks closed higher. Commonwealth Bank added 0.9 per cent, National Australia Bank bounced back 1.9 per cent from Tuesday’s losses, Westpac rose 1.1 per cent and ANZ Bank added 0.6 per cent.
NextDC’s plunge overshadowed a rally by other tech stocks, which tracked US market futures higher as strong earnings from some of Wall Street’s biggest AI players revived confidence in the sector. Software makers WiseTech and Xero gained 2.9 per cent and 5 per cent, while cloud connections provider Megaport also jumped 5 per cent and family tracking app Life 360 rose 4.8 per cent. On the telco side, Telstra rose 1.9 per cent.
Oil giants Woodside and Santos edged up 0.4 per cent and 0.5 per cent, respectively, as Brent crude resumed its gains to trade above $US110 a barrel as attacks on ships around the Strait of Hormuz threatened shipments. Refiner Ampol rose 0.9 per cent after its two-day slump.
CSL slipped 0.1 per cent. The biotech giant announced after the close of trading that it has appointed Deborah Waterhouse as its new chief executive officer. Waterhouse, CEO of ViiV Healthcare, a British JV majority-owned by GSK, will start in February next year. She will be based in the UK. Interim CEO Gordon Naylor will continue in his role until then.
Futures for Wall Street’s Nasdaq 100 were up 0.5 per cent late afternoon AEDT, suggesting gains when Wall Street opens, after Elon Musk’s SpaceX reported quarterly net income that more than doubled estimates, sending its shares up more than 5 per cent in after-hours trading. Contracts for the S&P 500 rose 0.2 per cent.
Super Micro Computer also beat expectations, lifting AI-infrastructure shares in extended trading in the US. The results offered some reassurance after concerns over AI valuations and financing rattled tech shares last week.
Attention turns to a packed earnings slate for signs that growth can justify the billions being poured into AI infrastructure, with Meta Platforms and Tesla due to report early Thursday AEDT.
“Clear earnings beats and constructive corporate updates are helping to ease some of the AI anxiety that has surfaced in recent sessions,” said Tim Waterer, chief market analyst at KCM Trade. “The next test comes with Meta and Tesla. If those reports deliver similarly strong results and guidance, it could go some way toward reigniting broader AI enthusiasm and giving the sector more sustained momentum.”
During regular trading hours in its Tuesday session, the S&P 500 added 0.3 per cent. The Dow Jones Industrial Average rose 1 per cent, while drops for several big tech stocks including Apple and Meta Platforms weighed on the Nasdaq composite, which ended down less than 0.1 per cent.
with AP, Bloomberg, Reuters
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
