Staff writers
Updated ,first published
The Australian sharemarket advanced in early trade after a tech-led rally pushed Wall Street higher as investors largely shrugged off concerns about bond yields at multi-decade highs. Oil prices fell.
The S&P/ASX 200 was up 23.50 points, or 0.3 per cent, at 8709.90 shortly after 11am AEDT, with seven 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 US69.63¢.
The broad-based early gains came despite a report that showed consumer confidence slumped last week after the Reserve Bank’s decision to raise the cash rate to 4.60 per cent, the highest in more than 15 years. Confidence in current and future financial conditions and in the short-term economic outlook is now at lowest levels since late May, the ANZ-Roy Morgan Australian Consumer Confidence survey released this morning showed.
Stock markets 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 to drive benchmarks higher.
“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 morning’s gains, with data centre and warehouse owner The Goodman Group up 0.7 per cent, shopping centre landlords Scentre and Vicinity up 1.7 per cent and 2 per cent, respectively, and property developers Stockland and Mirvac up 1.8 per cent and 1.6 per cent.
Three of the big four banks were also higher, up between 0.2 per cent (Commonwealth Bank) and 0.8 per cent (National Australia Bank), while Westpac was flat. The mining heavyweights were mixed, with iron ore and copper giant BHP up 0.4 per cent and Fortescue up 0.8 per cent, while Rio Tinto slipped 0.2 per cent. BlueScope Steel climbed 2.1 per cent.
Wall Street’s tech rally, however, failed to sweep over into the local market. Electronic component maker Codan dropped 3.3 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 1.5 per cent and 0.5 per cent, respectively.
Energy stocks also limited the ASX’s gains. Oil and gas giants Woodside and Santos were down 0.6 per cent and 0.4 per cent, respectively, 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 $US89 a barrel after shedding 3.7 per cent over the prior two sessions, while Brent was down 1.9 per cent at $US100.32 a barrel. 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 C.H. 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. C.H. 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 that’s been 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 that’s 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.
From our partners
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
