Source : the age
By Daniel Lo Surdo
The Australian sharemarket slipped on Friday after the Australian dollar hit a new two-year low overnight.
The S&P/ASX 200 lost 38.3 points, or 0.5 per cent, to 8290.9 points as at 12.32pm AEDT, with mining the only sector in the green. It comes after the local bourse fell by 0.2 per cent on Thursday.
The Australian dollar was valued at US62.04¢ as at 12.32pm, marking a recovery after falling to US61.72¢ overnight, the lowest since October 2022 and falling behind the previous record low set late week.
The Australian sharemarket opened flat on Friday after the Australian dollar hit a new two-year low.Credit: Louise Kennerley
Losses on the ASX were limited by growth in the materials sector, which benefited from increased iron ore prices. Giants BHP (up 1.2 per cent) and Rio Tinto (up 2.1 per cent) grew, as did gold miners Newmont and Northern Star, which added 1 per cent and 0.4 per cent respectively. Fortescue gained 0.6 per cent.
Uranium miners Paladin Energy (down 2.5 per cent), Boss Energy (down 1.9 per cent) and Deep Yellow (down 1.6 per cent) all fell, losing ground after last week’s rally.
Finance was the worst-performing sector on the bourse, and was led into the red by Commonwealth Bank, the largest stock on the ASX, which fell 1.4 per cent. Westpac (down 2 per cent), NAB (down 1.3 per cent) and Macquarie (down 1.2 per cent) retreated, as did insurers QBE (down 0.7 per cent) and Suncorp (down 0.8 per cent).
Woodside (up 0.2 per cent) and Santos (up 0.1 per cent) gained, while Origin Energy lost 0.3 per cent.
The Star continued its downward slide from Thursday, losing 15.4 per cent in Friday trading to trade at 11¢ as it battles to survive a cash crunch. It was the worst-performing stock in early trading.
Overnight, the world’s biggest bond market halted a sell-off that had rattled trading around the globe. Yields on US Treasuries stabilised after a rout that had driven 30-year yields to the highest since 2023. US sharemarkets were closed in observance of a national day of mourning for former president Jimmy Carter.
The yield on 10-year Treasuries had changed little at 4.69 per cent. Bitcoin fell 2.5 per cent to $US92,121.89. The key news event on the horizon for investors is US jobs data, due early on Saturday morning (AEDT).
US employers probably tempered their hiring last month to wrap up a year of moderating yet still healthy job growth that economists expect to carry on in 2025. Payrolls increased by 165,000 in December, when the US labour market moved beyond distortions caused by hurricanes and strike activity in previous months, according to the median projection of economists surveyed by Bloomberg.
Meanwhile, the US unemployment rate is forecast to hold steady at 4.2 per cent and average hourly earnings growth is likely to cool a touch from a month earlier.
“We expect the Fed would require a clear miss in key dimensions to spur a rate cut this month (payroll growth well below 100,000 and a jobless rate above 4.3 per cent) versus proceeding with the hold that is currently well priced in,” said Andrew Husby at BNP Paribas Securities.
A survey conducted by 22V Research showed most investors are watching payrolls more closely than normal. Only 26 per cent of the respondents think Friday’s data will be “risk-on”, 40 per cent said “risk-off”, and 34 per cent said “mixed/negligible”.
Since mid-September, the Fed has cut rates by 100 basis points. Yet the yield on 30-year Treasury bonds has risen by about the same amount. This divergence between short- and long-term rates is counterintuitive and far from isolated. British 30-year yields soared even as the Bank of England eased monetary policy.
The reason: investors are worried that the inflationary pressures sparked by the pandemic will linger in the global economy for years. And what’s more, governments that spent heavily to stimulate economies during coronavirus lockdowns are still borrowing lots of money.
“The back-up in bond yields since mid-September did not surprise us,” said strategists at Yardeni Research. “But it has surprised lots of other financial pundits, who are warning that this could be bad news for stocks. It could be, especially if the 10-year US Treasury bond yield revisits last year’s high of 5 per cent. That would probably bring a buying opportunity in the bond and stock markets.”
Yardeni bets that bond yields have normalised. The 10-year yield should range between 4 per cent and 5 per cent, as it did in the years before the global financial crisis, the strategists said.
with Bloomberg
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