ASX gains after mega-caps boost Wall Street; Bitcoin rises after SEC decision

The Australian sharemarket traded higher on Thursday, tracking gains on Wall Street, which was driven higher by gains in mega-cap stocks such as Amazon, Microsoft and Nvidia.

Bitcoin advanced after the much-awaited news this morning that the US regulator approved the first US-listed exchange-traded funds (ETFs) to track Bitcoin, giving institutional and retail investors exposure to the world’s largest cryptocurrency without having to directly hold it.

Wall Street closed higher as some mega-cap stocks advanced.
Wall Street closed higher as some mega-cap stocks advanced.Credit: Reuters

The S&P/ASX 200 rose 30.6 points, or 0.4 per cent, to 7499.1 about 12pm AEDT, with nine out of the 11 sectors stepping up. Consumer discretionary stocks (up 1.1 per cent) climbed the most while energy stocks (down 0.4 per cent) recorded the largest fall. The Australian dollar traded slightly higher at 67.22 US cents.

JB Hi-Fi was the strongest performing large cap stock on the local bourse, its shares lifting 3.4 per cent, followed by IGO (up 2.5 per cent) and South32 (up 2.4 per cent).

Worley recorded the worst slump among large-cap stocks as its shares tumbled 3.3 per cent. The engineering contractor came out of a trading halt just 30 minutes before the end of Wednesday’s trade amid corruption allegations in Ecuador.

Worley told the market just before Christmas that it lost a case against Ecuador in the international arbitration tribunal, but failed to disclose it had been dismissed because the tribunal found the company engaged in a “widespread pattern of illegality and bad faith”.

Whitehaven Coal (down 2.3 per cent) and Ampol (down 1.6 per cent) were among the biggest large-cap decliners.

Bitcoin traded 2.1 per cent higher at $US46,657 at lunchtime after regulators in the US green-lit the launch of spot Bitcoin exchange-traded funds, letting retail investors invest in the cryptocurrency without needing to manage cryptographic keys, bitcoin wallets or interact with unregulated crypto exchanges.

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The New York Stock Exchange, Nasdaq and Cboe Global Markets have received permission to list the spot-bitcoin EFTs, opening the door to investors begin trading as soon as Thursday (Friday AEDT).

In commodity news, Brent crude recorded another day of losses, falling 1 per cent to $US76.78 a barrel, and iron ore slipped 4 per cent to $US132.30 a tonne. The energy sector on the ASX dropped 0.4 per cent while mining gained 0.1 per cent on the bath of lithium and gold companies.

The big four banks were stronger, with CBA gaining 1.2 per cent, NAB adding 0.9 per cent, Westpac advancing 1.2 per cent and ANZ increasing 0.7 per cent.

Technology companies (up 0.7 per cent) were also stronger with data centre operator NEXTDC (up 1.4 per cent) and Altium (up 1.3 per cent) following a positive lead from Wall Street where major tech stocks rallied overnight.

On Wall Street, the Dow Jones Industrial Average closed 0.45 per cent higher at 37,695.73 while the S&P 500 rose 0.3 per cent and the Nasdaq Composite climbed 0.75 per cent. The Australian dollar traded largely unchanged at 66.97 US cents.

Microsoft, Alphabet and Amazon.com rose between 0.9 per cent and 1.9 per cent as the yield on the benchmark 10-year note inched lower ahead of a highly anticipated government bond auction.

Megacap stock Nvidia gained 2.3 per cent to hit a record high after TSMC, the world’s largest contract chipmaker, beat fourth-quarter revenue expectations, while Facebook’s owner Meta Platforms climbed 3.7 per cent to a more than two-year high.

Gains in equities have remained limited on Wall Street since the turn of the year as expectations of early rate cuts, which had driven much of the rally towards the end of 2023, scaled down following contrasting economic data and mixed signals from Federal Reserve officials.

In the Australian market, the ASX ended the previous session firmly in the red despite a brief uptick following a report that showed inflation had slowed to the lowest rate since January 2022. The S&P/ASX200 dropped 52 points, or 0.7 per cent, to 7468.5 at the close as miners, utilities and consumer staples dragged the index lower.

All eyes are now on US consumer and producer inflation reports for December, which could help determine the monetary policy trajectory for the US central bank. Investors will also closely monitor comments by New York Fed president John Williams, who is scheduled to speak later in the day.

Skyler Weinand, chief investment officer at Regan Capital, believes any strong surprise on the inflation front in the US may cause bond and equities to sell off.

Market participants on Wall Street have scaled back expectations for at least a 25-basis-point rate cut in the world’s largest economy in March, and see a near 67 per cent chance, down from around 86 per cent in the final week of 2023, as per the CME FedWatch Tool.

On Friday, banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are expected to report lower fourth-quarter profits.

“Banks are going to be in a very large hole for at least the next two years, unless yields drop tremendously,” Weinand added.

The lenders slipped between 0.8 per cent and 1 per cent overnight, pushing the S&P 500 bank index to a one-week low.

Boeing rose 0.9 per cent, recovering from a 9.3 per cent tumble in the last two sessions. CEO Dave Calhoun acknowledged errors by the US plane maker as more than 170 jets remained grounded for a fourth day.

With Reuters

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Source: Thanks smh.com