ASX is little changed as miners rise, oil stocks struggle; Myer jumps

The Australian sharemarket was little changed on Wednesday morning, with gains by mining stocks offset by weaker energy stocks as oil dropped below the $US100-a-barrel mark on optimism that diplomatic efforts to end the US-Iran war are progressing.

Having jumped at the open, the S&P/ASX 200 was basically flat at 8578.50 as of 11am AEST. The lukewarm morning comes after the ASX added 0.3 per cent on Tuesday, when Wall Street’s AI rally boosted the local tech sector. The Australian dollar was trading at US71.15¢.

Mining stocks bolstered the local market in early trade. Copper powerhouses BHP and Rio Tinto were up 2.1 per cent and 1 per cent, respectively, as copper prices in London advanced toward a record — and New York futures clinched a fresh all-time high — as falling inventories and pre-holiday buying signalled tightening supplies in China’s physical market.

Gold producers also shone. Northern Star Resources climbed 4.1 per cent, Evolution Mining rose 2.9 per cent and Newmont jumped 4.1 per cent as gold held steady around $US4360 an ounce, after swinging between gains and losses overnight, as traders monitored progress in talks between the US and Iran for clues on how energy costs will influence the Federal Reserve’s path for interest rates.

Meanwhile, energy stocks struggled, with oil extending losses as the US flagged progress in their talks with Iran, and Saudi Arabia moved to restart a key pipeline. West Texas Intermediate for November fell below $US90 a barrel after losing about 10 per cent over the previous five days, while Brent settled near $US99 on Tuesday and traded at $US98.53 this morning.

Local oil and gas giants Woodside and Santos were down 1.3 per cent and 1.4 per cent, respectively, while refiner Ampol shed 1.7 per cent.

President Donald Trump said officials had a “very productive” meeting with Iranian envoys, even after he threatened to annihilate the Islamic Republic during a United Nations speech. More meetings are planned, he added.

In the Middle East, Saudi Arabia aims to restore oil exports via its critical East-West pipeline in the coming days, enabling Riyadh to resume a bypass of the Strait of Hormuz. The conduit — which has the capacity to transport 7 million barrels a day — was damaged in attacks earlier this month.

Stocks depending on affordable fuel like airlines benefited. Qantas rose 1.6 per cent after its chief Vanessa Hudson said the airline is seeing strong bookings for the Australian summer travel season, and still expects to pay dividends to its shareholders despite rising jet fuel prices. Hudson talked to reporters while announcing the carrier’s Project Sunrise non-stop services that will connect Sydney to New York will start flying from mid-2028. Smaller rival Virgin Australia’s shares added 2 per cent.

Department store Myer soared 10 per cent despite scrapping its dividend after losses widened in the past financial year by 35 per cent to $276.5 million. The second half of the year was “characterised by a volatile and significantly more challenging macroeconomic and retail environment,” the retailer said, citing higher fuel prices, this year’s three rate hikes so far and slower household income growth. Sales still rose 11.3 per cent to $4.1 billion.

The department store has appointed its biggest shareholder, billionaire ragtrader Solomon Lew, to its board of directors. Myer purchased clothing chains Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E from Lew in a $950 million deal in October 2024, and at that time had invited Lew to the board. Lew, who also owns Peter Alexander and Smiggle, owns 30 per cent stake of Myer.

It’s a victory lap of sorts for Lew, who served on the board of what was then Coles Myer for 17 years from 1985, including a stint as chair. He was kicked off the board in 2002 following a very public boardroom spat over conflicts of interest as his private businesses were key suppliers to Coles Myer.

Tech stocks gave up some of their gains from Tuesday. Software makers WiseTech and Xero were down 1 per cent and 1.7 per cent, respectively, while AI data centre operator NextDC rose another 2.5 per cent.

Insurance Australia Group’s shares fell 2.7 per cent after the competition watchdog blocked its planned takeover of RAC Insurance, saying the deal would lessen competition in the supply of car insurance and home and contents insurance in Western Australia.

The big four banks were mixed. Commonwealth Bank, the nation’s largest lender, dropped 0.7 per cent, ANZ Bank shed 0.4 per cent and Westpac slipped 0.7 per cent, while National Australia Bank rose 0.2 per cent.

In US trading overnight, Wall Street held near its record high in a relatively quiet session. The S&P 500 closed flat and is sitting 0.4 per cent below its all-time high set last month. The Dow Jones Industrial Average lost 0.4 per cent, and the Nasdaq composite advanced 0.5 per cent. The tech-heavy Nasdaq 100 climbed 0.8 per cent to close at a new high of 30,732, propelled by renewed AI-investing euphoria as traders rotated out of stocks they expect to be disrupted by the technology.

AutoZone rose 3.2 per cent after the retailer reported a stronger profit for the latest quarter than analysts expected, though its revenue fell short. CEO Phil Daniele said the auto parts seller faced “a difficult selling environment” in the first two months of the quarter, but it improved afterward and “we feel we are well positioned for sales growth” in its upcoming fiscal year.

At Thor Industries, which sells recreational vehicles, the mood was more muted. CEO Bob Martin said expensive fuel, high interest rates and still-high inflation are stretching its customers’ budgets, and business “never reached the inflection point many in the industry expected” in its latest fiscal year. Its stock rose 5.5 per cent, though, after it delivered a stronger profit for the latest quarter than analysts expected.

Such strong profit reports are one of the main reasons the US stock market has reached the brink of its all-time high despite high oil prices and jitters about whether stocks in the artificial-intelligence industry shot too high.

Many companies are close to closing the books on their third quarter of the year, which ends with September. And analysts are forecasting companies in the S&P 500 will report overall growth of nearly 29 per cent for the quarter from a year earlier, according to FactSet.

If they’re right, it would be the third straight quarter of growth better than 25 per cent for the index. And stock prices tend to follow the track of corporate profits over the long term.

On the losing end of Wall Street were several stocks of companies in the oil and gas industry, which were hurt by the drop in crude prices. ConocoPhillips fell 1.8 per cent.

Banks also dropped, continuing their weak run since last week, when the Federal Reserve raised the overnight interest rate that it controls for the first time in three years. When the spread narrows between short-term interest rates and longer ones, banks come under pressure because they make profit off the difference.

JPMorgan Chase fell 3.4 per cent and was one of the heaviest weights on the S&P 500.

The gap between short- and long-term yields in the bond market did not move much, as the 10-year Treasury yield held steady at 4.96 per cent from late Monday. Like oil prices, it also remains far above where it was before the war with Iran began, when it was at 3.97 per cent.

In other international markets, indexes ticked higher across much of Europe and Asia. London’s FTSE 100 was an outlier and dipped 0.3 per cent.

Stocks rose 0.2 per cent in Hong Kong and 0.1 per cent in Shanghai after Alibaba unveiled new artificial intelligence chip technologies, including what it said was China’s most powerful AI chip. That comes just days ahead of a meeting between Chinese and US leaders at which competition to lead on AI technology is expected to be a major theme.

with AP, Bloomberg

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