Source : the age
Australia’s share market has started the new week higher, as BHP and the materials sector hit record highs, while banks and insurers sold off.
The S&P/ASX200 gained 44.2 points on Monday, up 0.49 per cent, to 9103.1, as the broader All Ordinaries rose 47 points, or 0.5 per cent, to 9316.7.
Money continued to rotate from banking stocks into miners as local economic concerns combined with rising commodity prices and outsized resource sector earnings.
BHP shares soared three per cent to hit an all-time high of $67.72, helping the resources sector reach its own fresh peak.
“Overall, the chase for the mining stocks – driven by pretty good earnings from BHP, Rio, Mineral Resources – is now being heightened by what happened at the end of last week in terms of US treasury and the (bond) buyback,” IG market analyst Tony Sycamore said.
“For the resource sector the path of least resistance is likely higher,” Mr Sycamore said.
Energy miners also rallied, with coal and uranium producers ticking higher, while Santos and Woodside lost ground after oil prices shaved some of the previous week’s gains.
Oil prices have started the week slightly lower, as traders await an overnight announcement on planned US sanctions on Iran and potentially its trading partners.
Precious metals and Bitcoin have also appreciated, as record US government debt and bond buyback plans reignited the “sell America” trade.
Gold is at 15-week highs near $US4646 ($8404), an ounce, rallying more than 16 per cent from July lows, and analysts say the debasement trade could send it higher.
“This means a rotation toward scarce, hard-to-print assets such as gold, Bitcoin and real assets, on the view that persistent fiscal deficits and accommodative policy will erode the purchasing power of fiat currencies over time,” Global X ETFs investment strategist Justin Lim said.
“We believe (gold) could reach $US5000 ($7000) by mid-September.”
Earnings season continued, with strong performance beats from lithium miner PLS (+7.9 per cent), Ampol (+4.3 per cent) and Adore Beauty (+19.3 per cent).
Less impressive were Aussie Broadband, NIB and Dan Murphy’s owner Endeavour, which each tumbled between four and nine per cent following their financial updates.
Looking ahead, Viva, Woodside and Coles will report on Tuesday, followed by Tabcorp, Sandfire Resources, Nine, Woolworths and Droneshield the day after.
On the macroeconomic front, analysts are tipping a drop in July headline inflation figures due Wednesday, but all eyes will be on the Reserve Bank’s preferred trimmed mean measure for hints on what’s ahead for borrowing costs.
The Australian dollar is buying 71.69 US cents, up from 71.46 US cents on Friday at 5pm AEST.
On Friday in the US, the S&P 500 rose 0.4 per cent for just its second gain in the six days since setting its all-time high last week. The Dow Jones jumped 517 points, or 1 per cent, and the Nasdaq composite climbed 0.4 per cent.
After soaring through the northern summer and then hesitating following this week’s surprise move by the US Treasury Department to repurchase more US government bonds, yields climbed further on Friday.
The yield on the 10-year Treasury rose to 4.73 per cent from 4.69 per cent late Thursday. It’s back above its level from before the Treasury market made its move, which analysts said at the time was likely to have only a temporary effect. The 30-year Treasury yield, which the Fed is also targeting with its bond repurchases, also rose and is near its highest level since 2007.
Contributing to Friday’s gains for bond yields was continued uncertainty about when the US-Israeli war on Iran will allow oil tankers to freely exit the Persian Gulf again. That caused oil prices to rise, which affects Treasury yields because they increase worries about inflation.
Besides inflation, concerns about the fast-rising debt for the US government have also been sending yields upward. Higher yields can slow the economy and undercut prices for all kinds of investments.
One of the biggest beneficiaries of Bessent’s move to try to get longer-term yields lower is bitcoin. Cryptocurrencies often rise when interest rates are lower and more money is flowing through the financial system. Hopes for legislation in Washington to help the crypto industry have also helped it.
Bitcoin has climbed above $US77,000 from less than $US63,000 a week ago. That helped stocks in the crypto industry lead Wall Street. Robinhood Markets jumped 13.7 per cent, and Coinbase Global gained 8.2 per cent.
With AAP, AP, Bloomberg
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
