Tech bolsters ASX after Fed chief soothes Wall Street

By Millie Muroi

The Australian sharemarket was little changed in lunchtime trading on Thursday after a mixed session on Wall Street, even though all sectors except materials and healthcare stocks advanced.

The S&P/ASX 200 edged up 7.9 points, or 0.1 per cent, to 7315.70 as of 12:30pm AEDT, bolstered by the IT sector after one of the largest ASX-listed tech companies announced large staff cuts. Shares in department store Myer soared after the company said its half-year profit more than doubled and there was more growth to come.

Wall Street is mixed in early afternoon trade.
Wall Street is mixed in early afternoon trade.Credit:AP

Cloud-based accounting software company Xero jumped close to 8 per cent, leading the large-cap winners after it announced a staff reduction of up to 800 employees. The job cuts come as the company, which has heavily expanded over the past years, is facing a deepening downturn in the technology sector. Other IT stocks also gained, with WiseTech climbing 2.5 per cent and Computershare adding 0.3 per cent, respectively.

Myer shares rocketed 18 per cent after the department store owner said a bounceback in CBD retail and strong online sales helped it deliver its best profit result in almost a decade. Coal miners Yancoal (up 3.6 per cent) and Whitehaven (up 2.4 per cent) also advanced.

Heavyweight BHP (down 2.5 per cent) weighed on the bourse as it traded for the first time without the rights to its latest dividend, sending the materials sector more broadly down 1.1 per cent. Meridian Energy (down 3.4 per cent) led the large-cap decliners, followed by healthcare companies Cochlear (down 1.9 per cent) and Fisher & Paykel (down 1.6 per cent).

The patchy session on the ASX follows a day of mixed trading on Wall Street. The S&P 500 added 0.1 per cent, the Dow Jones lost 0.2 per cent while the Nasdaq rose by 0.4 per cent higher.

US stocks were coming off a sharp drop on Tuesday after Federal Reserve chair Jerome Powell said the US central bank could speed up its hikes to interest rates if pressure on inflation stays high. Such hikes can ease inflation by slowing the economy, but they also hit prices for stocks and other investments and raise the risk of a recession.

Powell overnight said again that pressure on inflation appears to be running higher than earlier expected. But he also stressed much more strenuously than he did on Tuesday that the Fed hasn’t decided yet on the size of its future hikes.


He said policymakers want to see what reports say in the run-up to their next meeting later this month. That gave some solace to the market, which shuddered a day earlier on fears the Fed was set to increase the size of its rate hikes.

“We’re not on a preset path, and we will be guided by the incoming data,” the powerful central banker said.

One of the reports Powell highlighted came out as he spoke on Wednesday morning. It showed that the number of job openings advertised across the US last month remained higher than expected. Such data can give a clue about where wages are heading for workers. Strong wage gains are good for workers struggling to keep up with high inflation, but too-high growth could cause a vicious cycle that pushes inflation higher, the Fed worries.

But the report also showed some signs of easing pressure, including fewer Americans quitting their jobs.

A separate report on Wednesday suggested hiring is still stronger across US private employers than expected. It could offer a sneak peek of what another one of the reports highlighted by Powell could say: the US government’s more comprehensive report on hiring scheduled for Friday.

With AP

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