By Staff reporters
The Australian sharemarket has dipped lower to start the week as investors await the Reserve Bank’s interest rate decision on Tuesday.
The S&P/ASX 200 was down 19.9 points, or 0.2 per cent, in early trade, with eight of 11 sectors in the red. Utilities are proving to be the biggest weight on the bourse.
Wall Street advanced on Friday to the cusp of a new record.Credit: AP
The miners are mixed with Rio Tinto shedding 1.2 per cent, BHP 0.1 per cent lower and Fortescue up 0.2 per cent. Gold miners are weaker, with Northern Star down 0.7 per cent and Evolution Mining sliding 0.1 per cent.
The big banks are mixed. Westpac was up 0.4 per cent, but Commonwealth Bank (down 0.3 per cent), National Australia Bank (down 0.7 per cent) and ANZ Bank (down 0.1 per cent) are in negative territory.
Energy stocks are also mixed with Woodside Energy rising 0.4 per cent but Santos slid 0.6 per cent and Ampol lost 0.4 per cent. Oil prices edged higher this morning.
The RBA announces its decision on Tuesday afternoon and is expected to keep interest rates unchanged for a third straight meeting, with traders and economists on alert for any shift toward a more hawkish tone that might signal the possibility of hikes next year.
The Australian dollar was trading at US66.38¢ at 10.51am AEDT.
Wall Street rose to the edge of its all-time high on Friday. The S&P 500 added 0.2 per cent and finished just 0.3 per cent shy of its record closing level, which was set in October. It had briefly topped the mark during the day, before paring its gain.
The Dow Jones added 104 points, or 0.2 per cent, and the Nasdaq composite gained 0.3 per cent.
The modest moves capped a quiet week for Wall Street, offering a respite following weeks of sharp and scary swings.
Ulta Beauty helped lead the market and jumped 12.7 per cent after the retailer reported stronger profit and revenue for the latest quarter than expected. Chief executive Kecia Steelman said its customers are broadly feeling pressure, but Ulta saw growth across its categories, particularly in e-commerce. It raised its forecast for revenue over the full year.
Another encouraging signal for the holiday shopping season came from Victoria’s Secret & Co. It delivered a milder loss for the latest quarter than analysts expected, and it likewise raised its forecast for sales over the full year. Its stock rallied 18 per cent.
Warner Bros Discovery rose 6.3 per cent after Netflix said it would buy Warner Bros for $US72 billion ($109 billion) in cash and stock following its pending split from Discovery Global.
The deal for the company behind HBO Max, Casablanca and Harry Potter is not a sure thing, though. It could raise fears at the US government about too much industry power residing at Netflix.
Shares of Netflix fell 2.9 per cent. Paramount Skydance, which earlier had been seen as a front-runner to buy Warner Bros., sank 9.8 per cent.
If the S&P 500 does return to a record, it would mark the latest time the US sharemarket has powered past what seemed to be a debilitating set of worries. Most recently, those concerns centred on what the Federal Reserve will do with interest rates, whether too many dollars are flowing into artificial-intelligence technology and if sharp drops for cryptocurrencies would bleed over into other markets.
After some back and forth, the widespread expectation among traders is now that the Fed will cut its main interest rate next week in hopes of shoring up the slowing US job market. If it does, that would be the third cut of the year.
Investors love lower interest rates because they boost prices for investments and can juice the economy. The downside is that they can worsen inflation, which is stubbornly remaining above the Fed’s 2 per cent target.
Economic reports released on Friday did little to change expectations for a coming cut. One said that an underlying measure of inflation that the Fed prefers to use was at 2.8 per cent in September, exactly as economists expected.
A separate report said US consumers appear to be downgrading their expectations for inflation coming in the near future. They’re now forecasting 4.1 per cent inflation for the year ahead, down from their forecast of 4.5 per cent last month, according to the University of Michigan.
That’s the lowest such forecast since January, which is important because heightened expectations for inflation can create a vicious cycle that only worsens inflation.
In the bond market, Treasury yields climbed. The yield on the 10-year Treasury rose to 4.13 per cent from 4.11 per cent late on Thursday.
Most Viewed in Business
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
