By Emma Koehn
Australian shares started Friday’s session stronger, with mining and energy stocks lifting the index as the market digested news that Michele Bullock will be the next Reserve Bank governor.
The S&P/ASX200 was up by 0.5 per cent to 7,283.4 at 10:15am, with mining giant BHP providing the biggest lift with gains of close to 2 per cent in the first 15 minutes of trading.
Prime Minister Anthony Albanese and Treasurer Jim Chalmers confirmed just minutes before the market open that Michele Bullock will become the next governor of the Reserve Bank of Australia in September, becoming the first woman to hold the position.
Bullock, who is currently a deputy governor and has spent her entire career at the central bank, was among the favourites tipped to take the reins.
Jim Chalmers said the appointment was a “history-making” event, and that Bullock was the best placed person to take the bank into the future.
Materials, energy and technology stocks helped the local market higher in early trade, with the largest stocks in each sector seeing gains.
WiseTech Global was ahead 1.8 per cent to $78.54, while Woodside Energy was up by 0.5 per cent to $35.91, and Fortescue Metals saw gains of 1.8 per cent to $22.89.
Healthcare stocks proved the biggest weight, with biotech giant CSL sliding by 0.9 per cent in the first 20 minutes of trade to $262.22.
The nation’s financials sector was 0.5 per cent stronger after the announcement of the new RBA governor, with all big four banks ahead.
The gains come on the back of a strong performance on Wall Street amid hopes that inflation is finally starting to cool in the US.
The S&P 500 rose by 0.8 per cent to its highest close since April 2022. The Dow Jones added 0.1 per cent and the Nasdaq composite rallied by 1.6 per cent, to 14,138.57 as Big Tech stocks led the way.
The Australian dollar continued to march higher. It was 1.5 per cent higher at 68.89 US cents at 6.50am AEST.
High inflation has been the main reason investors have been fearing a possible recession, because of how high the Federal Reserve has cranked interest rates to get prices under control. High rates undercut inflation by bluntly slowing the entire economy and hurting prices for investments. They can also cause unanticipated parts of the economy to break.
Traders remain nearly convinced the Fed will raise the federal funds rate at its next meeting in two weeks to its highest level since 2001. But this week’s inflation data has also pushed traders to build bets for that to be the final rate increase of this cycle.
Treasury yields fell further in the bond market as traders pared bets for Fed rate hikes later this year.
The drop for yields accelerated after James Bullard said in the afternoon that he’s stepping down as president of the St. Louis Federal Reserve Bank to join Purdue University’s business school as its dean next month. He was one of the loudest voices at the Fed pushing for higher rates to control inflation.
That had Amazon, Alphabet and Nvidia among the strongest forces pushing up the S&P 500. Amazon gained 2.7 per cent after it said the first day of its annual Prime Day event on Tuesday was the biggest sales day in its history.
Alphabet rose 4.7 per cent after Google said it’s rolling out Bard, its chatbot powered by artificial intelligence, to more countries around the world and launching new features for it.
Nvidia, which has been at the centre of a frenzy on Wall Street around AI, rose 4.7 per cent.
The earnings reporting season is just getting underway, and JPMorgan Chase will lead a barrage of banks on Friday that will tell investors how much they made during the spring. Expectations overall are dim, and analysts are forecasting the sharpest drop in earnings for S&P 500 companies since the pandemic was walloping the global economy in the spring of 2020.
On the losing side of Wall Street Thursday was Exxon Mobil. It fell 1.8 per cent after saying it would buy Denbury, which owns carbon dioxide pipelines, for $US4.9 billion ($7.1 billion) in stock. Denbury fell 1.3 per cent.
Source: Thanks smh.com