Welcome to your five-minute recap of the trading day, and how the experts saw it.
The Australian sharemarket was unable to hang onto its gains from earlier in the day and finished in the red, reflecting Wall Street’s negative lead where reports showed the US job market was stronger than expected, dampening the chance of rate cuts.
The S&P/ASX 200 closed 5 points or 0.07 per cent lower to 7489.1 on Friday with tech stocks weighing heavily on the bourse.
Vehicle parts seller Bapcor was the winner of the day, closing 3.4 per cent higher, followed by Challenger (up 3 per cent) and Magellan (up 2.9 per cent).
Medical equipment firm Resmed (up 2.3 per cent) and insurer QBE (up 2 per cent) finished as the day’s biggest large-cap advancers.
Interest rate-sensitive sectors slipped lower. Information technology companies sank deeper into the red across the session, closing 2.1 per cent lower as WiseTech (down 3.8 per cent), Xero (down 2.2 per cent) and Altium (down 1.5 per cent) declined. The consumer discretionary, communication services, utilities, consumer staples, industrials, energy and material sectors were either trading flat or slightly down.
Core Lithium was the ASX 200’s worst performer on Friday, shedding 11.5 per cent after pausing operations at its Northern Territory mine.
Overall, the local bourse is 1.3 per cent lower than where it began at the start of the week.
Fund manager Magellan rose to the top of the bourse, rising 6 per cent in early trade before closing 2.9 per cent higher at $9.65 after it announced its funds under management had increased by $600 million to $35.8 billion in December.
While the group continued to bleed funds, with net outflows of $200 million last month, it recorded net institutional inflows of $100 million in its latest update. It comes after a troubled period of poor returns and senior management departures in 2021 which has seen the company’s share price and funds under management tumble over the past two years.
Financials was the day’s best-performing sector, closing 0.9 per cent higher as all the big four banks finished in the green. CBA added 1.4 per cent, NAB gained 0.3 per cent, Westpac advanced 1 per cent and ANZ closed 0.3 per cent higher. Macquarie Group, which was in the green for most of the day, finished 0.1 per cent lower.
Wagyu meat producer AACo lifted 5 per cent on Friday after mining magnate Andrew Forrest overnight increased his stake in the company to 19.5 per cent, which falls just shy of the 20 per cent takeover threshold. Another billionaire, Joe Lewis, is the majority shareholder in the company.
Overnight, Super Retail Group – which operates Supercheap Auto and Rebel – announced it had replaced PwC with EY as its external auditor. PwC will remain the retailer’s auditor until March 1. The company’s share price finished the day 3.7 per cent higher.
Overnight, Wall Street’s weak start to 2024 carried into a third day, and stocks finished mixed on Thursday following reports showing the US job market remains solid, though maybe a touch too strong.
The S&P 500 slipped 16.13 points, or 0.3 per cent, to 4688.68 and is on track for its first losing week in the last 10. The Dow Jones Industrial Average eked out a gain of 10.15 points, or less than 0.1 per cent, to 37,440.34, and the Nasdaq composite fell 81.91, or 0.6 per cent, to 14,510.30.
Pharmaceutical giant Walgreens Boots Alliance sank 5.1 per cent after it nearly halved its dividend so that it could hold on to more cash. That helped overshadow gains for airlines and cruise-ship operators, which recovered some of their sharp losses from earlier in the week. Carnival steamed 3.1 per cent higher, and United Airlines got a 2.4 per cent lift.
US stocks have broadly regressed this week after rallying nine straight weeks into the end of last year. Critics said the market was due for at least a breather following its big run, which fed on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates sharply this year.
Rate cuts give a boost to prices for stocks and other investments, while also relaxing the pressure on the economy and financial system. Treasury yields in the bond market have already eased since autumn on hopes for such cuts, releasing pressure on the stock market.
But Treasury yields rose on Thursday (Washington time) following several reports on the US job market that were stronger than expected. The American economy is in a delicate phase where investors want it to remain solid, but not too hot.
A healthy job market is of course good for workers and stamps out worries about an imminent recession. But too much strength could prod the Federal Reserve to keep interest rates high because it could keep upward pressure on inflation. And the Fed has already hiked its main interest rate to the highest level since 2001.
One report from the US government on Thursday showed fewer US workers filed for unemployment benefits last week than expected. Another from ADP Research Institute said private employers accelerated their hiring last month by more than economists expected.
A more comprehensive report on the jobs market from the US Labour Department will arrive on Friday. Economists expect that to show US hiring slowed to 160,000 jobs last month from 199,000 in November.
“If tomorrow’s numbers show the same kind of strength and the economy keeps rolling along, it’s fair to wonder why the Fed would be in a rush to cut rates,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.
Traders are betting the Federal Reserve will cut interest rates by twice as much this year as the central bank has indicated. Wall Street is also thinking the first cut could come as soon as March, and a stronger-than-expected economy makes such predictions less realistic. Critics had already called them overly aggressive.
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