Source : the age
By Hannah Kennelly
The Australian sharemarket edged higher on Monday morning, as markets brace for the impact of President-elect Donald Trump’s return to the White House.
The S&P/ASX 200 climbed 18.90 points or 0.23 per cent, to 8329.30 points as of 1.30pm AEDT, with nine out of 11 industry sectors trading in the green.
Wall Street closed its best week since Donald Trump’s election win with more gains.Credit: AP
The Australian dollar made minor gains, and traded at US62.05¢ at 1.30pm AEDT.
Materials were one of the top-performing sectors, with mining heavyweights BHP and Rio Tinto jumping 0.3 per cent and 0.7 per cent respectively.
Woodside Energy and Ampol also climbed 0.5 per cent and 0.1 per cent respectively. The gains come after Ampol recently appointed a former executive director of Fortescue, Stephen Pearce, to its board.
Meanwhile, ailing casino operator Star Entertainment dropped 7.1 per cent after the company reported a sharp slide in revenue on Monday. In an ASX statement, the group told shareholders its ability to continue operating was in question unless it could find a new source of funding.
“The group’s capacity to raise $150 million of subordinated debt is limited in the short term in the absence of additional liquidity solutions … there remains material uncertainty as to the group’s ability to continue as a going concern,” the statement said.
The four big banks had a solid morning, with CBA, Westpac, ANZ and NAB climbing 0.4 per cent, 0.3 per cent, 0.2 per cent and 0.3 per cent.
Biotech giant CSL (down 0.7 per cent) pushed the healthcare sector lower, although software medical imaging company Pro Medicus was up 2.7 per cent.
The real estate sector continued its strong streak with shopping centre owners Scentre and Stockland up 0.3 per cent and 0.2 per cent.
On Wall Street on Friday, the most forceful pushes upward came from Big Tech stocks. All the companies in what’s come to be known as the “Magnificent Seven” rose: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Because they’re so massive in size, their movements carry more weight on the S&P 500 and other indexes than other stocks.
The Magnificent Seven have been under pressure recently because of criticism their stock prices may have shot too high after leading the market for so many years. Such worries grew after Treasury yields jumped in the bond market. Higher yields hurt prices for all kinds of investments, particularly those seen as the most expensive.
But stocks broadly got a lift last week from an encouraging report on US inflation, which raised hopes that the Federal Reserve may deliver more cuts to interest rates this year. More such cuts, which began in September, would ease the brakes off the economy and boost prices for investments, although they can also give inflation more fuel.
Wall Street has been lurching down and up in recent weeks as economic reports pushed traders to revamp their expectations about what the Fed will do with rates. Lower worries about inflation have sent Treasury yields down and stocks up, while worsening worries about inflation have triggered the opposite reaction.
Treasury yields eased sharply in the past week, and the 10-year Treasury yield eased further on Friday. It’s at 4.61 per cent, down from 4.62 per cent late on Thursday and from 4.76 per cent a week earlier.
Still, even with this week’s better-than-expected readout on inflation, some on Wall Street remain sceptical about the chances for more cuts. With the US economy in solid overall shape, “you shouldn’t fix what’s not broken”, Bank of America economists Claudio Irigoyen and Antonio Gabriel said in a BofA Global Research report.
They also pointed to the uncertainties created by “Trumponomics 2.0.” Policies pushed by Trump could help push up inflation, or at least expectations for it, including widespread tariffs and tax cuts for an economy that’s already growing.
TikTok said on Monday (AEDT) it was restoring its service after Trump said he would revive the social media app’s access in the US when he returns to power.
Prices for all kinds of investments from stocks to cryptocurrencies have swung amid the uncertainty following an initial burst after Election Day while a Trump meme coin has boomed. On one hand are hopes for stronger profits for companies and greater acceptance of crypto. On the other are worries about a potentially swelling US government deficit and upward pressure on inflation.
Wall Street still sees banks as some of the biggest beneficiaries from a second Trump administration. Besides a potentially stronger economy, which would boost profits for lending, investors expect another Trump term to mean less regulation on banks.
With AP
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