ASX hits new 100-day high, led by miners, on inflation reprieve
By Billie Eder
Welcome to your five-minute recap of the trading day and how the experts saw it.
The numbers: The Australian sharemarket finished strong on Wednesday after starting the day marginally lower following a lacklustre session on Wall Street, with investors closely watching the dramatic developments in China.
The S&P/ASX200 closed up 30.90 points, or 0.4 per cent, at 7284.20, setting a new 100-day-high. Sentiment was buoyed by data from the Australian Bureau of Statistics showing that at an annual rate, inflation edged down from 7.3 per cent in September to 6.9 per cent last month. The lower-than-expected reading sparked hopes the Reserve Bank could soon pause its cycle of rate hikes.
The lifters: Coal stocks lifted the index again on Wednesday, as Whitehaven, New Hope and Yancoal climbed 8.4 per cent, 6.8 per cent and 3.3 per cent, respectively, amid rising demand for the fossil fuel as the Northern Hemisphere heads into winter.
The laggards: Consumer staples closed in the red, with supermarket giants Woolworths and Coles down 1.5 per cent and 0.6 per cent, respectively.
The lowdown: Apart from the encouraging inflation report, it was a pretty non-eventful day for the local bourse, besides the materials sector posting solid gains. Todd Hoare, the head of public markets at Crestone, said investors were waiting to see what news will come out of the US when Federal Reserve chair Jerome Powell delivers his economic outlook overnight.
However, coal and iron ore miners continued to lift the index, thanks to strong fossil fuel and base metal prices.
“It’s a combination of coal prices being reasonably resilient, and I think almost all of it is the fact that China is making some tentative steps about reopening post-COVID and relaxing some measures” Hoare said. China’s government is under pressure after harsh COVID restrictions set off the biggest wave of protests across the country since 1989.
Market heavyweight BHP climbed 1.6 per cent, Rio Tinto added 1.7 per cent and Mineral Resources jumped 4.4 per cent.
Fortescue Metals had a positive start to the day, but dropped off during afternoon trading with the stock closing down by 0.4 per cent. The $60 billion iron ore company announced on Tuesday that former Woodside Energy executive Fiona Hick would be appointed as CEO, ending its search for a new CEO since Elizabeth Gaines vacated the role last December,
Overnight in the US, stocks ended an unsteady day with mixed results as gains for energy companies were offset by losses in technology and other sectors. The S&P 500 slipped 0.2 per cent and the tech-heavy Nasdaq lost 0.6 per cent. The Dow Jones Industrial Average ended just barely in the green, and small-company stocks rose.
The yield on the 10-year US Treasury note, which helps set mortgage rates, rose to 3.76 per cent. Crude oil prices rose.
Markets in Europe were mixed and markets in Asia rose broadly. Hong Kong’s benchmark index jumped 3.5 per cent as protests in China seemingly calmed down amid a heightened police presence in major cities and the government eases some of its lockdown restrictions.
Wall Street’s big focus remains the Federal Reserve’s fight against the hottest inflation in decades. The central bank has been aggressively raising interest rates to make borrowing more difficult and tame high prices. The Fed’s benchmark rate currently stands at 3.75 per cent to 4 per cent, up from close to zero in March.
Investors hope that the Fed could ease up on its rate increases and are closely watching the latest data on inflation, consumer spending and the employment market.
Tweet of the day:
Quote of the day:
“What are you? You are a parasite! You eat us, peel our skin, drink our blood, and eat our flesh. Do you know how miserable the lives of ordinary people are?,” said a young woman to police in Chengdu city centre, China.
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