Source : THE AGE NEWS
By Staff reporters
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket closed in positive territory on Thursday, recovering from a softer start to the day, as banks and technology stocks offset weakness in resources and drove the bourse higher for the seventh session in a row.
The S&P/ASX 200 gained 17.9 points of 0.2 per cent to 8297.5, as the market reversed an early slide, with the big banks gaining ground in the afternoon. Six of the market’s 11 sectors were in the green, with financials, technology and consumer discretionary stocks recording the strongest gains.
Wall Street had a choppy session on Wednesday. Credit: Reuters
The lifters
Technology stocks climbed, following a rise US tech giants overnight, with Xero jumping 4.7 per cent after the accounting software group reported a 30 per cent rise in net profit after tax over its financial year, to $NZ227.8 million ($209.1 million). Logistics software business WiseTech rose 1.9 per cent and software group TechnologyOne rose 1.3 per cent.
Insurance Australia Group shares leapt 5.7 per cent after it announced it was buying the Royal Automobile Club of Western Australia’s insurance business and entering into a distribution and brand licensing agreement for a total of $1.4 billion.
The big four banks were all higher, with Commonwealth Bank gaining 1.3 per cent, Westpac rising 0.8 per cent, National Australia Bank up 1.4 per cent, and ANZ Bank per cent adding 1.7 per cent. CBA shares hit a record high of $169.74.
The laggards
Treasury Wine Estates, the maker of Penfolds wines, fell 5.2 per cent after it announced chief executive Tim Ford would step down later this year, ending a five-year stint in the role. He will be replaced by Sam Fischer, the chief executive of New Zealand drinks producer Lion.
Lendlease fell 1.6 per cent after the Australian property giant said it was in the late stages of inking a 50/50 joint venture with King Charles’ property company The Crown Estate, in the United Kingdom. The $3.8 billion ASX-listed property developer responded to media speculation on Thursday saying it was in negotiations with the King’s company over six projects that are part of its UK development portfolio.
A slide in iron ore prices sent big miners lower. Fortescue fell 1.1 per cent while BHP slumped 0.7 per cent and Rio Tinto fell 0.4 per cent.
The lowdown
As investors await a potential interest rate cut next week, the Australian Bureau of Statistics on Thursday said the unemployment rate was unchanged at 4.1 per cent in April, while the number of employed people shot up by 89,000 in the month, beating the market’s expectations. The number of unemployed people also increased by 6000 in the month.
The Australian dollar strengthened slightly after the result, and was trading at US64.40¢ at 4.52pm AEST. Economists believe the strength of the labour market will be a key influence on how deeply the Reserve Bank cuts interest rates, with markets tipping a likely cut next week.
The Reserve Bank is expected to cut the cash rate when it meets next week. Credit: Louie Douvis
Senior APAC economist for Capital Economics Abhijit Surya said the ABS data suggested the labour market remained “very tight”. While he tipped a rate cut from the Reserve Bank of Australia (RBA) next week, the research house argues the central bank will only cut the cash rate to a low point of 3.6 per cent this cycle – which is higher than what most economists expect.
“With the labour market going from strength to strength, we’re more convinced than ever that the RBA will be reluctant to cut rates aggressively,” Surya said.
On Wall Street, a choppy day of trading ended with a mixed finish for stock indexes on Wednesday, as gains by several big technology stocks helped temper losses.
The S&P 500 edged up 0.1 per cent after wavering between small gains and losses much of the day. Most of the stocks in the index lost ground, but solid gains for several heavyweight technology companies such as Nvidia helped counter a decline in healthcare and other sectors.
The Dow Jones slipped 0.2 per cent, while the Nasdaq composite rose 0.7 per cent.
Super Micro Computer surged 15.7 per cent after signing a partnership agreement with Saudi Arabian data centre company DataVolt. Advanced Micro Devices gained 4.7 per cent after announcing a $US6 billion ($9.3 billion) stock buyback program.
Nvidia rose 4.2 per cent and Google parent Alphabet added 3.7 per cent.
Other big gainers included eToro Group, a retail trading platform for stocks and cryptocurrency. It rose 28.8 per cent in its first day of trading.
The market has been relatively steady since its surge on Monday, which came after the US and China entered a 90-day pause in their trade war. The market gained some more ground on Tuesday after the government reported that inflation unexpectedly cooled across the country in April. Additional updates on inflation and retail sales are expected on Thursday.
The benchmark S&P 500 Index, which sits at the centre many 401(k) accounts, has erased all its losses since US President Donald Trump escalated his global trade war in early April. It has now also erased its losses for the year and is back to within 4.1 per cent of its all-time high set in February.
“The stockmarket’s rally has legs, as the trade negotiation with China was seemingly the toughest one on the docket,” said Rick Gardner, chief investment officer at RGA Investments.
With AP
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