Energy, banking stocks drive ASX higher; Miners decline

By Jessica Yun

The Australian sharemarket has had a positive start to Wednesday, reflecting a buoyant Wall Street that lifted to its best level in over 15 months after several big financial companies reported stronger-than-expected profits.

The S&P/ASX200 edged up 0.6 per cent, or 43.6 points, to 7,327.4 at 10:20am AEST with energy and banking stocks lifting the bourse.

Wall Street has made a strong start to its week.
Wall Street has made a strong start to its week. Credit: AP

The big four banks are all up by more than 1 per cent in early trade. Brainchip Holdings (up 6.8 per cent), Imugene (up 6.5 per cent) and Ampol (up 5.7 per cent) are all sharply higher.

At the bottom of the pack is Northern Star Resources (down 5.2 per cent), Ansell (down 2.7 per cent) and Aurizon Holdings (down 2.4 per cent).

Overnight, Wall Street’s frenzy around artificial intelligence saw the S&P 500 rise 0.7 per cent to its highest finish since early April 2022. The Dow Jones rallied 1.1 per cent and the Nasdaq composite climbed 0.8 per cent.

Microsoft was the biggest single force pushing up the S&P 500, by far. It shook off a morning loss and rose 4 per cent after announcing the pricing for some artificial-intelligence services. It will charge $US30 ($44) per user per month for its Microsoft 365 Copilot, which Wedbush analyst Dan Ives called a “flex-the-muscles move.”

Wall Street has sent a select group of stocks soaring this year on hopes that AI will drive tremendous growth in profits and herald a revolution for the global economy. Besides Microsoft’s nearly 50 per cent gain for the year, Nvidia has more than tripled.

Stocks in the financial industry also drove the market higher. Charles Schwab jumped 12.6 per cent after reporting stronger profit and revenue for the spring than analysts expected. It was one of several big financial companies to report better results than forecast, including Bank of America and Morgan Stanley.


On the losing end was Masimo, which makes medical equipment and also runs a consumer audio business home to the Bowers & Wilkins and Denon brands. It tumbled 20 per cent after it said it expects to report weaker-than-expected revenue for the spring in part because of fewer patients at US hospitals. It also said a decline in demand for audio products has moved up from the lower end to the premium and luxury end.

Wall Street’s reporting season is just ramping up as companies tell investors how much profit they earned from April through June. Banks have been at the front of the parade, which JPMorgan Chase helped begin last week with a better-than-expected report. Banks can offer a unique window into the economy’s strength because of how many different types of customers they serve.

“We continue to see a healthy US economy that is growing at a slower pace, with a resilient job market,” Bank of America CEO Brian Moynihan said while reporting results for the nation’s second-largest bank. Its stock rose 4.4 per cent.

Reports on the economy Tuesday came in mixed. One said that sales at U.S. retailers grew by less last month than economists expected, marking a slowdown from May’s growth. That could indicate a tiring consumer, whose strong spending so far has been one of the main bulwarks keeping the economy out of a recession.

But economists said underlying sales trends, which exclude automobiles, gasoline and other items, were stronger than expected in June.

A separate report said US industrial production contracted again last month. That was a surprise to economists, who had been forecasting a flat reading.

Altogether the data seemed to reinforce the heavy bet among traders that the Federal Reserve will raise its federal funds rate at its meeting next week, but that could be the final hike of this cycle.

If the Fed does follow through on expectations and raises the federal funds rate next week to a range of 5.25 per cent to 5.50 per cent, it would be at its highest level since 2001. That would be up from its record low of nearly zero early last year.

But inflation has been slowing over the last year, and hopes are high on Wall Street that it will continue cooling enough to get the Fed to stop raising rates and perhaps begin cutting them next year.

Economic data broadly has been on the upswing recently, and Goldman Sachs economist Spencer Hill sees it helping growth remain “near the top end of the range we view as the sweet spot for rebalancing the labour market without a recession.”

With AP

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