Staff writers
Updated ,first published
The Australian sharemarket erased its early losses as technology shares advanced, with investors moving on from a weak session on Wall Street following US inflation figures that were hotter than expected.
The S&P/ASX 200 was up 10.70 points, or 0.1 per cent, at 9139.70 at 2.15pm AEDT as investors sought out tech shares and waded back into BHP, paring the key materials sector’s losses. The ASX jumped 1.1 per cent on Tuesday. The Australian dollar rose 0.2 per cent to US68.80¢.
The market rebound came despite data that showed Australian home loans posted a record drop in the third quarter, underscoring the erosion of borrowing demand in response to the Reserve Bank’s aggressive interest-rate increases to control inflation. The value of new home loans fell 15.5 per cent in the three months through September – almost double economists’ forecast and the biggest quarterly decline since the series began in 2002, Australian Bureau of Statistics data showed.
Materials stocks, which had been the biggest drag on the ASX in early trade, pared their losses as investors started piling back into BHP, sending the world’s largest miner from a 1.8 per cent fall to a modest rise of 0.2 per cent. Rio Tinto crept back to a drop of just 0.2 per cent, while gold miners were mixed, following sharp falls in early trade on America’s inflation data. Northern Star Resources was down 0.4 per cent and Evolution Mining rose 1.5 per cent.
Gold maintained its losses after the US inflation shock and hawkish remarks from Federal Reserve officials reinforced bets for an interest rate hike in December. Higher rates are a headwind for gold, which doesn’t pay interest.
Financial stocks were mixed in afternoon trade. Commonwealth Bank gave up its early gains for a fall of 1.2 per cent. Australia’s biggest bank said its first-quarter profit climbed 8 per cent to $2.8 billion as growth in loans to businesses offset struggles in mortgages during the housing slump. National Australia Bank – the country’s biggest business lender – dropped 0.7 per cent. Westpac gained 0.6 per cent and ANZ Bank was up 1.3 per cent.
Macquarie Group fell 1.4 per cent. The “Millionaires’ Factory” said it would pay a $14 million penalty after admitting to failing to prevent confusion among new savings account customers about a “welcome rate” offer, acknowledging it did not respond to complaints in a timely manner.
Tech stocks advanced as better-than-expected earnings from AI computing provider CoreWeave in the US helped sustain interest in the artificial intelligence trade. Software makers WiseTech, Xero and Technology One were up 2.1 per cent, 0.8 per cent and 1 per cent, respectively. Family tracking app Life 360 jumped 8.8 per cent, rebounding from its sell-off on Tuesday.
After the close of Wall Street, CoreWeave eased fears about its debt-laden business during a high-stakes quarterly report, in which it raised its sales forecast above Wall Street estimates. Its shares rose about 6 per cent in late trading in the US.
Oil stocks turned higher as oil prices ticked up again. Brent crude was trading above $US92.50 after briefly slumping below $US90 a barrel overnight when technical factors helped deepen a sell-off driven by expectations of further de-escalation in the Iran war. Woodside shares rose 0.4 per cent and Santos gained 1 per cent.
On Wall Street overnight, the S&P 500 slipped 0.4 per cent and gave back some of its big rally from the day before. The Dow Jones Industrial Average dropped 0.3 per cent, and the Nasdaq composite sank 0.7 per cent.
Pressure from the bond market undercut stocks following the discouraging report on inflation. Americans had to pay more for groceries, electricity and other costs of living last month than what economists had expected. That could push the Fed to hike its main interest rate at its next meeting in December and beyond.
One Fed official even hinted the central bank may increase the federal funds rate by double the typical amount next month because of how high inflation has remained for years.
Higher interest rates can help rein in inflation, but they do so by making it more expensive for everyone to borrow money and by slowing the overall economy. Higher rates also make investors less willing to pay high prices for stocks and other investments.
The yield on the 10-year Treasury leaped to 4.99 per cent from 4.88 per cent late on Monday. It’s a notable move for the bond market, and the yield helps set where rates are for mortgages and other loans going to US households and businesses.
The single heaviest weight on the S&P 500 was Nvidia, which fell a further 5.5 per cent. It’s been under pressure since its board announced an investigation into its CEO, Jensen Huang, who admitted to a relationship with a woman who, according to The New York Times, US intelligence determined was gathering information for China.
It’s also been swinging amid broader worries that have knocked the artificial-intelligence industry around recently. Democratic victories in statehouses across the country last week raised concerns about possible restrictions on construction of AI data centres. That built on top of longstanding worries that AI stock prices had shot too high and were in a bubble.
The recent shakiness for AI-related stocks had raised questions about whether Anthropic, the company behind the Claude chatbot, may delay its initial public offering of stock.
But Anthropic said in a filing with US regulators that it’s looking to sell its stock at a price valuing the company at up to $US1.4 trillion ($2 trillion). That would make it one of the most valuable companies on Wall Street, worth more than Walmart, JPMorgan Chase, ExxonMobil or Coca-Cola.
with AP, Bloomberg
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
