Source : THE AGE NEWS
The Australian sharemarket advanced on Tuesday, fuelled by a tech-led rally on Wall Street as investors largely shrugged off concerns about bond yields at multi-decade highs.
The S&P/ASX 200 finished up 49.30 points, or 0.6 per cent, at 8735.70, with nine of its 11 sectors in the green. The local bourse closed flat on Monday after a stronger US dollar weighed on commodity prices. The Australian dollar was flat at US69.64¢.
The broad-based gains came despite reports showing consumer confidence had slumped after the Reserve Bank’s decision last week to raise the cash rate to 4.6 per cent – the highest in 15 years.
Following the rate hike, confidence among Australian consumers plunged about 20 per cent, according to the Westpac-Melbourne Institute consumer sentiment index. The overall survey, conducted between September 28 and October 1, showed the index dropped by 4.7 per cent to 80.4 in October – the worst level since the outbreak of the Middle East conflict in early April. For respondents surveyed after the RBA call, the index fell to 67.2 – the lowest since the late 1990s.
Meanwhile, the ANZ-Roy Morgan Australian Consumer Confidence survey showed confidence in current and future financial conditions and in the short-term economic outlook is now at lowest levels since late May.
Stockmarkets have largely looked through rising interest rates, elevated energy costs and inflation concerns that have sent global bond yields soaring. Instead, investors have focused on strong earnings, resilient consumer spending and surging artificial intelligence-related investment.
“Relative equity-market calm amid the bond market’s ‘perfect storm’ is understandable, given accelerating economic growth and the AI boom’s rate insensitivity,” said Lisa Shalett at Morgan Stanley Wealth Management.
Real estate investment trusts led the session’s gains, with shopping centre landlords Scentre and Vicinity up 2.7 per cent and 3.2 per cent, respectively, while property developers Stockland and Mirvac rose 2.5 per cent and 1.6 per cent. Goodman Group, the biggest property trust with its holdings of warehouses and data centres, gave up its gains in the afternoon to close 0.7 per cent lower.
The big four banks were also higher, up 0.8 per cent (Commonwealth Bank, National Australia Bank) and 0.6 per cent (Westpac, ANZ). The mining heavyweights were mixed, with iron ore and copper giant BHP, Rio and Fortescue up 1.6 per cent, 1.1 per cent and 1.4 per cent, respectively, while gold miner Northern Star was flat and its rivals Evolution Mining and Newmont were down 0.9 per cent and 0.7 per cent amid steady gold prices.
Wall Street’s tech rally failed to sweep over into the local market. Electronic component maker Codan slumped 4.3 per cent, having soared last week to become the nation’s biggest tech stock after a bullish trading update. Software makers WiseTech Global and Technology One were down 2.5 per cent and 1.8 per cent, respectively, while AI data centre operator NextDC lost 2.2 per cent.
Energy stocks were mixed, with oil and gas giants Woodside up 0.1 per cent, Santos down 0.1 per cent and refiner Ampol up 0.5 per cent as oil prices held a two-day drop, due to rising Persian Gulf exports and a steep price cut by Saudi Arabia, which reinforced signs of a loosening market.
West Texas Intermediate steadied near $US90 a barrel after shedding 3.7 per cent over the prior two sessions, while Brent was up 0.4 per cent at $US100.71 a barrel at 5pm AEDT. Gulf producers are moving larger volumes through the Strait of Hormuz, with more tankers taking the risk of navigating the waterway despite still-elevated risks. The moves come as Saudi Aramco cut the prices of its flagship Arab Light grade for Asian buyers to a six-year low to push for market share.
On Wall Street overnight, US stocks closed higher after a couple of buyout announcements helped lift the market while oil prices fluctuated.
The S&P 500 added 0.7 per cent and pulled within 0.3 per cent of its all-time high, which was set during the northern summer. The Dow Jones Industrial Average rose 0.2 per cent, while the Nasdaq composite climbed 1.1 per cent to set a record of its own.
One of Wall Street’s strongest gains came from PTC, which leaped 33.5 per cent for the biggest move in the S&P 500. Schneider Electric of France said it would pay $US205 in cash for each of the software company’s shares in a deal valuing it at about $US22.6 billion ($32.4 billion).
That helped lift prices for other stocks in the software industry.
RXO, meanwhile, jumped 22.5 per cent after CH Robinson Worldwide said it would buy the truck brokerage business in a deal where RXO investors could get $US30.25 in cash for each of their shares. CH Robinson fell 12.1 per cent for the largest loss in the S&P 500.
Trading was otherwise relatively quiet as the wait continues for the start of the latest earnings reporting season. Analysts have big expectations for how much profit companies made from July through September. They’re forecasting growth of nearly 30 per cent from a year earlier for companies in the S&P 500, according to FactSet. If they’re correct, it would be the third straight quarter of growth above 25 per cent for the index.
Such strong growth and the expectation for more are what have allowed stocks to rally near records despite a long list of worries and challenges.
Worries about high oil prices have helped push up yields in the bond market, and the 10-year US Treasury yield rose to 5.33 per cent from 5.28 per cent late on Friday. It’s near its highest level since 2002.
High yields can slow the economy by making it more expensive for everyone to borrow money, while also making investors feel less willing to pay high prices for stocks and other investments.
Another factor pushing up yields is the strength of the US economy, which is benefiting from big spending by businesses on AI data centres. US consumers also continue to spend and drive the economy, even though they say they’re getting more frustrated by the high inflation squeezing their finances.
The general expectation on Wall Street is that the Federal Reserve will hike its main interest rate at least once by the end of the year in hopes of reining in the fast increases for the cost of living. The Fed raised its federal funds rate last month for the first time in three years.
In other international markets, France’s CAC 40 fell 0.8 per cent for one of the world’s bigger losses. Worries have been rising about the French government’s big debt and its strained budget.
On the winning side of the globe was Japan, where Tokyo’s Nikkei 225 jumped 2.4 per cent on strength for technology stocks.
with AP, Bloomberg
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