ASX posts another record after US shares surge on rate-cut hopes
By Millie Muroi and Jessica Yun
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket set yet another record high on Monday after Wall Street’s main indices surged on the weekend, fuelled by bets of coming US interest rate cuts.
The S&P/ASX 200 Index closed out the trading session above the 8000 barrier for the first time. It jumped 58.3 points, or 0.7 per cent, to 8017.6, after pulling back slightly from its intraday high of 8037.3. Every sector finished higher. The Australian dollar was fetching US67.7¢.
Futures pointed to a 0.6 per cent rise in the ASX 200 on Monday.Credit: Louise Kennerley
The lifters
Interest-rate sensitive sectors were among the best performers, with technology and consumer discretionary (each up 1.4 per cent) pushing the benchmark higher. The communication services sector also rose 1 per cent, with employment platform Seek (up 4 per cent) the biggest large-cap advancer.
Among other big winners were Nanosonics (up 5.1 per cent), Charter Hall (up 4.8 per cent) and Afterpay owner Block (up 4.2 per cent).
Commonwealth Bank shares rallied another 0.8 per cent after the company eclipsed BHP on Friday to become Australia’s largest public company. The other three major banks also saw significant share price gains.
Mining giants BHP (up 0.6 per cent) and Fortescue (up 1.7 per cent) gained a boost from a spike in iron ore prices.
The laggards
Industrials (up 0.3 per cent) was the weakest sector, with Qantas and Infratil shares both down 1.9 per cent.
Lifestyle Communities shares plunged 18.1 per cent after the ABC reported some retirees felt like they were trapped in a “financial prison” while living in some of the company’s planned communities. Bellevue Gold shares fell 4.9 per cent and Kelsian Group was down 3.4 per cent.
The lowdown
According to Judo Bank economists, the market rally can be attributed to last week’s weaker-than-expected US inflation data, signalling that the US Federal Reserve is on track to cut rates soon.
Wall Street’s rally was again driven by the big names in artificial intelligence and technology.
“The Magnificent 7 – NVIDIA, Amazon, Microsoft, Google, Meta, Apple, and Tesla – account for over 60 per cent of the year-to-date gains,” Wilsons Advisory analysts wrote in a research note to clients.
However, they noted that with high US earnings expectations, there is little room for disappointment. “With Q2 earnings season now under way, we need to see these strong earnings growth numbers delivered in order to sustain the current rally,” they state.
On Friday, the S&P 500 Index rose 0.5 per cent, the Dow Jones Industrial Average was up 0.6 per cent and the Nasdaq Composite Index added 0.6 per cent.
Mixed signals on big US banks’ profits and inflation did little to dent Wall Street’s belief that easier interest rates are on the way.
Bank of New York Mellon shares climbed 5.2 per cent after the company reported better profit than analysts expected.
In the bond market, Treasury yields yo-yoed after the release of the latest update on inflation. It said prices rose more at the wholesale level last month than economists expected, which was a letdown after data on Thursday said inflation at the consumer level was better than expected.
But after a couple of initial swings, Treasury yields calmed and remained lower than they were late Thursday.
Tweet of the day
Quote of the day
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That’s a letter that Antoinette Lattouf’s legal team, led by Maurice Blackburn’s head of employment law, Josh Bornstein, wrote to the ABC last week offering a compromise settlement after mediation between the parties failed last month. Here’s what’s on Lattouf’s wish list.
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