ASX in green, inflation pushes higher

The Australian sharemarket has shed some early gains after the release of the nation’s latest inflation figures increased pressure on the Reserve Bank to lift interest rates at its meeting next week.

Figures from the Australian Bureau of Statistics showed that headline inflation jumped to 4.3 per cent in September after being at 4 per cent in August, due to a surge in petrol prices and a pick-up in the cost of building homes.

The closely watched underlying measure of inflation was 3.6 per cent. It was up slightly from the August report which had been revised down to 3.5 per cent. The bureau noted that petrol prices jumped by 9.4 per cent in September after a 14.8 per cent increase in August.

The S&P/ASX was up 56.5 points, or 0.6 per cent, to 8906.60 as of 11.35am AEDT, easing slightly after the ABS release.

Meanwhile, Reserve Bank governor Michele Bullock has made clear a further interest rate rise is on the agenda at the bank’s meeting next week.

Appearing before a Senate estimates hearing today, Bullock said the nation’s fundamental economic challenge was the inability of the economy to grow without putting upwards pressure on inflation.

“Despite the unemployment rate recently rising a little more than we had expected, the labor market still seems a little tighter than we previously judged,” she said in an opening statement.

Miners, banks and tech stocks powered the ASX this morning, while energy stocks declined. The ASX added 0.5 per cent on Tuesday. The Australian dollar was stronger at US70.31¢.

Shares of Star Entertainment went into a trading halt ahead of a judgment by the Federal Court, which found the casino operator contravened anti-money laundering and counter-terrorism financing laws and hit it with a $260 million fine. Star argued in court last year that a fine of more than $100 million may exceed its financial means to pay.

Justice Cameron Moore was damning about Star’s conduct, and acknowledged that the casino operator may need to raise further cash to pay the fine. ”Star’s profitability is such that it is likely to need to raise money to pay any penalty,” he said.

Gold shares led the mining sector higher, with Northern Star Resources up 1.8 per cent, Evolution Mining up 3 per cent and Newmont up 1.1 per cent. Prices for the precious metal advanced as bargain hunters stepped in after it fell below a key level, while traders await the Federal Reserve’s interest-rate decision later this week.

“Gold is finding its feet again after briefly falling below $US4,000, with the sharp correction attracting bargain hunters and physical buyers,” said ING commodity strategist Ewa Manthey.

The two biggest miners, BHP and Rio, took a breather after their rally on Tuesday, rising 0.5 per cent and 0.2 per cent in early trade. Silver miner South32 rose 3 per cent, steelmaker BlueScope added 1.1 per cent and Lynas Rare Earths jumped 6.2 per cent.

Tech stocks also advanced, after renewed enthusiasm for artificial intelligence lifted US stocks ahead of earnings from some of the tech giants. Software makers WiseTech, Xero and Technology One added 2.3 per cent, 1.2 per cent and 1.5 per cent, respectively, drone components maker Codan gained 1.7 per cent and cloud and data centre connections provider Megaport climbed 5.3 per cent.

Embattled NextDC, still recovering from its $3 billion share sell-off last week, rallied 9.7 per cent after outlining the contract conditions and financial covenants it has with its lenders and saying it was meeting those, with $8.67 billion in liquidity left at the end of September.

AI data centre landlord Goodman Group rose 2.9 per cent, leading the property sector higher.

Woolworths, the nation’s biggest supermarket chain, rose 0.9 per cent after saying its first-quarter sales rose 4.7 per cent to $19.4 billion, slightly beating market expectations, with Australian supermarket sales up 6.9 per cent. Woolies’ sell-out Ooshies campaign, which ran from mid-July and was sold out in a month, was so popular that staff were at times unable to cope with the demands of higher foot traffic and sales, chief executive Amanda Bardwell said. Rival Coles, which is releasing its first-quarter trading update on Friday, was flat.

Meanwhile, the big four banks were all trading higher, bolstering the market’s early gains. CBA, the nation’s second-biggest stock, rose 1.4 per cent, Westpac added 0.9 per cent while ANZ Bank and National Australia Bank advanced 0.6 per cent.

Energy stocks were lower as oil held its two-day decline, with traders tracking the outcome of a tight Israeli election that’ll help to shape the course of the US war with Iran. West Texas Intermediate traded near $US100 a barrel after falling more than 3 per cent in the past two sessions. Brent fell below $US114. In Israel’s election, opposition leader Gadi Eisenkot edged ahead of Prime Minister Benjamin Netanyahu in exit polls, though both blocs remain short of a majority and votes were still being counted.

Local oil and gas giants Woodside and Santos both slumped 2 per cent, and refiner Ampol lost 2.6 per cent.

On Wall Street overnight, renewed enthusiasm for artificial intelligence lifted equities ahead of earnings from some of the biggest tech companies and the Federal Reserve’s rate decision.

The S&P 500 rose 0.6 per cent and pulled within 1.2 per cent of its all-time high set earlier this month. The Dow Jones Industrial Average added 15 points, or less than 0.1 per cent, and the Nasdaq composite climbed 1.2 per cent.

The majority of stocks within the S&P 500 fell, but the gains for influential AI stocks made up for that. AI stocks rose to another winning day after swerving for weeks on worries about whether their boom is under threat because of how expensive it’s become for companies to borrow money to build data centres and buy more AI chips.

Broadcom climbed 4 per cent after announcing a $US63 billion ($89.6 billion) financing deal where several Wall Street firms will help Anthropic get access to Broadcom’s XPU AI accelerators and networking solutions.

Elsewhere in the industry, Nvidia added 0.9 per cent and was one of the strongest forces behind Broadcom pushing the S&P 500 higher. CoreWeave, a company that’s borrowed money to buy AI chips that it rents out to customers over the cloud, jumped 7.9 per cent and was consistently higher through the day following several days of sharp swings.

General Motors climbed 5.5 per cent after saying it’s moving its stock from a listing on the New York Stock Exchange to the Nasdaq. The automaker said the Nasdaq, which is home to several of the world’s biggest technology stocks, is a fit for its tech-driven strategy. The move could also allow GM to join the Nasdaq 100 index, which would force investment funds that mimic the index to buy it.

JetBlue Airways flew 19 per cent higher even though it reported a larger loss for the summer than analysts expected. CEO Joanna Geraghty said the company expects to return to making sustained operating profits next year and to deliver at least $1 in earnings per share in 2028.

Investors may have been bracing for something worse after the airline’s stock came into the day with a loss of nearly 48 per cent for the year so far.

Another travel company, Royal Caribbean Group, also helped lead the market and rose 5.5 per cent. The cruise operator delivered a stronger profit for the summer than analysts expected, while raising its forecast for profit over the full year.

Companies overall are under pressure to deliver big growth in profits. Expectations are high among investors, and that’s what allowed their stock prices to run to records recently despite high inflation, high interest rates and other concerns weighing on the market.

Boeing fell 10.7 per cent after reporting a larger loss for the latest quarter than analysts expected.

Hilton Worldwide Holdings sank 2.1 per cent after reporting weaker revenue for the summer than analysts expected. The hotel company said it expects to see “increased impact from the Middle East” during the quarter.

In the bond market, Treasury yields held relatively steady a day before the Federal Reserve is scheduled to announce its latest decision on interest rates. The Fed last month hiked the fed funds rate for the first time in three years in hopes of slowing inflation, but the widespread expectation on Wall Street is that it will hold rates steady this time.

The yield on the 10-year Treasury edged down to 4.99 per cent from 5.00 per cent late on Monday.

Helping to keep yields in check was a drop for oil prices. The price for a barrel of Brent crude fell 1.2 per cent to $US109.41.

In other international markets, indexes were mixed across Europe and Asia. Stocks jumped 3.1 per cent in Seoul and fell 1.3 per cent in Shanghai for two of the bigger moves.