ASX opens lower as miners weigh
By Stan Choe and Najma Sambul
The Australian sharemarket has edged lower on Friday with the big miners leading the way down despite a positive lead from Wall Street.
The S&P/ASX200 was down 5.70 points to 7,505.90 at 10.18 am AEDT.
Energy and materials weighed on the local index and the big miners, BHP, Rio Tinto, and Fortescue were all in the red, losing 4.22 per cent, 5.25 per cent, 2.2 per cent, respectively.
IT, real estate, and health care had gains in the morning with Seek, WiseTech, Xero all up, with the latter gaining 9.22 per cent. REA group was also up 5.51 per cent.
Wall Street surged higher, led by excitement around Facebook’s parent company, Meta Platforms and other tech stocks.
The S&P 500 rose 1.5 per cent to continue its bumper week, the Dow dipped by 0.1 per cent and the tech-heavy Nasdaq composite jumped by 3.3 per cent, with Meta soaring by 23.3 per cent. But in after-hours trade, disappointing results from Apple, Alphabet and Amazon weighed on sentiment.
Meta jumped after it reported better revenue for the latest quarter than analysts expected and said it expects to spend less this year than earlier forecast. While its latest profit fell short of expectations, Facebook’s parent also announced a program to buy back $US40 billion ($56 billion) of its stock.
Stocks had already been on the upswing through the start of the year on hopes that the Federal Reserve may be set to pause soon on its hikes to interest rates. Such increases help stamp out inflation but also hurt the economy and investment prices.
A day earlier, stocks and bonds took off after Fed Chair Jerome Powell said the central bank is finally starting to see progress in its battle against inflation. Markets took that as a cue that a pause may indeed be imminent, and investors even raised bets for cuts to rates late this year. Rate cuts act like steroids for markets, juicing prices and providing support for the economy.
That’s despite Powell saying on Wednesday that a couple more rate hikes will likely be appropriate to get inflation down to the Fed’s target. He also said he did not foresee any rate cuts in 2023 and again pledged to “stay the course until the job is done” on beating inflation.
Thursday’s rally stretched across the Atlantic, where markets rose after central banks for Europe and the United Kingdom also raised rates in their efforts to squelch inflation.
The European Central Bank raised its key rate by 0.50 percentage points and said another would arrive next month. The Bank of England also raised its key rate by half a percentage point and said it’s seeing signs that inflation has turned the corner, though it also stressed it’s too soon to declare victory over inflation.
European stocks rallied, with the German DAX returning 2.2 per cent. The FTSE 100 in London was up 0.8 per cent.
Wall Street will keep a close eye Friday’s US jobs report, where economists expect to see a slowdown in hiring. The job market has largely remained resilient even in the face of swift rate hikes by the Fed over the last year.
AP
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