Miners outweigh broader losses to keep ASX steady

By Sumeyya Ilanbey
Updated

Welcome to your five-minute recap of the trading day, and how experts saw it.

The numbers

The Australian sharemarket pared back its midday losses and ended the day flat, despite the positive lead of Wall Street, where the S&P 500 recorded a third consecutive record high amid mixed quarterly reports.

Reporting season is starting to heat up on Wall Street.
Reporting season is starting to heat up on Wall Street.Credit: AP

The S&P/ASX 200 inched 4.3 points, or 0.1 per cent, higher to 7519.2 at the close, with eight out of the 11 sectors trading in negative territory. Mining (up 1.3 per cent), real estate investment trusts and utilities (both up 0.9 per cent) were the only sectors in the green.

The lifters

Shares in gold miner Northern Star Resources (up 6 per cent) and lithium miner Pilbara Minerals (up 5.8 per cent) rallied following their quarterly updates to the market, placing them in the top two performing large-cap stocks.

Pilbara warned investors it was unlikely to pay an interim dividend, and its December quarter revenue was down 46 per cent on the previous three months despite an increase in production.

Northern Star Resources, meanwhile, confirmed the company was on track to meet its fiscal 2024 guidance, thanks to an “exceptional” performance at its Kalgoorlie operations, offsetting the challenges it is facing at its Yandal operations.

Lynas Rare Earths (up 4.5 per cent), Yancoal (up 3.7 per cent) and IGO (up 3.3 per cent) rounded out the top five mega-cap advancers at the end of trade, giving the mining sector a huge boost. Iron ore heavyweights BHP (up 1.2 per cent), Fortescue (up 1.2 per cent) and Rio Tinto (up 1 per cent) were also trading higher.

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The laggards

Information technology (down 1.2 per cent) was the worst-performing sector, with large-caps WiseTech (down 2 per cent), Xero (down 0.9 per cent), NEXTDC (down 1.3 per cent) and Altium (down 1.2 per cent) all trading lower, but recovering some of their earlier slumps. TechnologyOne (up 0.8 per cent) regained its earlier losses.

IDP Education (down 3.1 per cent) recorded the greatest declines among large-cap stocks, followed by James Hardie Industries (down 2.6 per cent) and Treasury Wine Estates (down 2.4 per cent).

Investor reaction to Woodside’s quarterly report was fairly muted, with shares in the energy giant down 0.4 per cent, after the company posted a record output in 2023, lifting quarterly revenue by 3 per cent, but it disappointed some analysts.

The lowdown

Eightcap market analyst Zoran Kresovic is confident the Australian sharemarket will exceed its all-time high in the coming weeks, despite the slowing growth of the local bourse following the bumper November to December period.

“We had a bit of a bounceback on the local front today after a really good day yesterday,” Kresovic said. “This year, I would probably put quite a bit of focus on the material and financials sectors, and I expect the banks to do quite well.

“On the global front, there’s still a lot of geopolitical tensions and a bit of uncertainty in the market as it’s pricing itself at the moment because we were expecting to see a 25 basis point interest rate cut from the US in March, but it looks like we’re not going to get there until the month of May.”

In commodities news, Brent Crude declined 1 per cent to $US79.28 a barrel, iron ore rose 2.6 per cent and spot gold lifted 0.2 per cent. The Australian dollar was trading 0.1 per cent higher at US65.76¢.

The S&P 500 rose 0.3 per cent. The Nasdaq composite climbed 0.4 per cent while the Dow Jones slipped 0.3 per cent, a day after topping 38,000 points for the first time.

Procter & Gamble climbed 4.1 per cent after posting stronger profit for the latest quarter than analysts expected. The company behind Charmin and Olay benefited from price hikes for its products, and it raised its forecast for profit for this full fiscal year.

United Airlines flew 5.3 per cent higher after it also reported stronger profit for the last three months of 2023 than analysts expected. It made more in revenue from customers in both basic economy and premium seats, though it warned it may lose money in the first three months of this year because of the grounding of its Boeing 737 Max 9 planes.

They helped offset an 11 per cent tumble for 3M after it gave a forecast for earnings this upcoming year that fell short of analysts’ expectations. The maker of Post-it notes and Command strips was the main reason the Dow dropped from its record.

Earnings season is kicking into gear, and more than a dozen companies in the S&P 500 reported their latest quarterly results Tuesday morning. More than 50 are scheduled to follow up later this week, including Tesla and Intel.

Expectations are relatively low for companies’ profits at the end of 2023. Analysts have forecast companies in the S&P 500 will deliver weaker overall earnings per share than a year earlier, which would be the fourth such decline in the last five quarters, according to FactSet.

Stocks have nevertheless rallied to records, mostly on expectations for the Federal Reserve to cut interest rates several times this year after hiking them dramatically the last two years.

Treasury yields have already eased considerably since the autumn on expectations for coming rate cuts, though critics warn traders may have gone overboard again in forecasting how many cuts will come and how soon the Fed will begin.

Yields were mixed in the bond market. The yield on the 10-year Treasury rose to 4.14 per cent from 4.11 per cent late Monday, though it remains well below its 5 per cent level during October.

The “everything rally” that began late last year on hopes for a pivot by the Fed likely caused mutual-fund managers to scramble to boost their ownership of stocks to keep up. Even when stocks took a mini-breather at the start of 2024, investors seemed to “remain little concerned with downside risk,” according to strategists at Barclays led by Venu Krishna. That could leave “less room for fundamental upside from here.”

In stock markets abroad, Hong Kong’s Hang Seng jumped 2.6 per cent to recover some of its sharp loss for the year so far on hopes that Chinese authorities may make moves to shore up markets. The Hang Seng is still down nearly 10 per cent so far in the young year on worries about a weak recovery for the world’s second-largest economy.

Tweet of the day

Quote of the day

“There are pressures of cost of living that have, according to Treasury analysis and according to common sense, most impacted low- and middle-income earners,” Prime Minister Anthony Albanese said, as he unveiled changes to the stage three tax cuts. “Since 2019, there has been a pandemic, there has been a recession, there has been global inflation. There has been not one war, but two wars, that has had an impact.”

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With AP

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Source: Thanks smh.com