ASX extends early gains; Altium soars, BHP slumps

By Sumeyya Ilanbey
Updated

The Australian sharemarket extended its gains in midday trade, as fresh data revealed unemployment jumped to 4.1 per cent, boosting hopes for a rate cut.

The S&P/ASX 200 climbed 51 points, or 0.68 per cent, to 7598.7 about 12.50pm AEDT, with tech stocks (up 5.85 per cent) leading the way on a busy day of results.

Wall Street had a strong session, providing a positive lead for the Australian sharemarket.
Wall Street had a strong session, providing a positive lead for the Australian sharemarket.Credit: Bloomberg

Investors were buoyed by Australian Bureau of Statistics data showing unemployment hit 4.1 per cent in January, the first time in two years that the jobless rate rose above 4 per cent. The Reserve Bank is looking for a softening in the labour force to bring inflation back to its 2 to 3 per cent target.

Tech stocks led the rally as Altium soared 28.37 per cent, hitting a record high, after Japanese chipmaker Renesas Electronics announced a $68.50 per share takeover bid for the software firm. Shares were trading at $65.795 about 1pm.

The $9.1 billion takeover bid helped push fellow mega-caps WiseTech (up 3.33 per cent), Xero (up 4.2 per cent), NEXTDC (up 2.76 per cent) and TechnologyOne (up 2.07 per cent) higher.

Energy and mining stocks failed to capitalise on the ASX rally, with the sectors down 1.64 per cent and 0.84 per cent, respectively.

Woodside slumped 1.81 per cent, Santos fell 1.22 per cent, Whitehaven Coal tumbled 6.52 per cent and Yancoal slipped 1.42 per cent.

BHP shares slumped 1.92 per cent after the miner warned of more than $10 billion in writedowns to ahead of its results next week. Telstra was 1.5 per cent lower after it posted a $1 billion net profit but cut its outlook following a disappointing result from its enterprise business.

Pro Medicus was the worst performing large-cap stock at midday after its shares crashed 10.75 per cent when the company lifted its interim net profit 33.33 per cent in line with analysts’ consensus expectations. IDP Education was down 7.34 per cent and Meridian Energy fell 2.98 per cent.

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Wesfarmers surged by 4.08 per cent after record earnings at Kmart helped it deliver a 3 per cent profit rise, while fund manager Magellan jumped 6.72 per cent after posting a 24 per cent increase in net profit and unveiling Sophia Rahmani as its next chief executive. She will start in May.

Origin Energy shares are 2.63 per cent higher after its profit jumped and it upped its dividend. Whitehaven slid by 3.9 per cent after cutting its dividend on the back of slumping coal prices.

Overnight on Wall Street, the S&P 500 climbed 47.45 points, or 1 per cent, to 5000.62 and clawed back more than two-thirds of its loss from Tuesday. A hotter-than-expected report on inflation forced investors to delay forecasts for when the Federal Reserve may begin cutting interest rates, potentially into the summer. Expectations for such cuts are a big reason stocks rallied to records recently.

The Dow Jones gained 0.4 per cent a day after dropping 524 points for its worst loss in nearly 11 months. The Nasdaq composite jumped 1.3 per cent.

The Australian dollar also recovered some of the ground it lost after the release of US inflation figures. It was fetching 64.81 US cents at 1.32pm AEDT.

The smallest stocks, which took the hardest hit from worries about higher interest rates on Tuesday, bounced back more than the rest of the US market. The Russell 2000 index leaped 2.4 per cent.

Helping to keep things steadier on Wall Street was a calmer bond market. Treasury yields eased after shooting upward a day earlier on expectations the Fed would keep rates high for longer. The central bank has already jacked its main interest rate to the highest level since 2001 in hopes of slowing the overall economy just enough to grind high inflation down to its target.

The yield on the 10-year Treasury fell to 4.25 per cent from 4.32 per cent late Tuesday. It’s still well above its 3.85 per cent level at the start of this month.

Critics have been arguing that stock prices may have run too far, too fast in their rally since October. A pullback could be healthy if it takes some of the “froth” out of the market, according to JJ Kinahan, CEO of IG North America.

Kinahan said he found it interesting that big recent winners like Nvidia and other chipmakers finished Tuesday well off their lows for the day. That makes him think the day’s drop “was more about taking some profits than it was panic selling” by investors.

Nvidia, which has been riding a mania around artificial-intelligence technology, rose 2.5 per cent Wednesday and was the single strongest force pushing up the S&P 500 index.

Most companies in the S&P 500 have been topping analysts’ forecasts for the last three months of 2023. Hopes for stronger growth in 2024 from a solid economy have been another reason the S&P 500 has set 10 records already this year.

Lyft shares leaped 35.1 per cent after a wild ride in off-hours trading driven in part by a typo in its latest earnings report. The ride-hailing company reported stronger results than analysts expected, but its press release also said it expects a key measure of profitability to improve by 500 basis points, or 5 percentage points. Later, it said that should have been 50 basis points, or 0.5 percentage points.

Lyft’s stock rocketed by more than 60 per cent in after-hours trading Tuesday following the typo.

Rival Uber Technologies rose 14.7 per cent after its board authorised a program to buy back up to $US7 billion ($10.8 billion) of its stock. Investors tend to like such programs because they send cash directly to shareholders and can boost per-share profits.

In stock markets abroad, London’s FTSE 100 rose 0.7 per cent following a better-than-expected report on inflation in the United Kingdom.

Hong Kong’s Hang Seng index gained 0.8 per cent after trading reopened there, but markets remained closed in mainland China for the Lunar New Year holiday. Stocks fell elsewhere in Asia, with Japan’s Nikkei 225 down 0.7 per cent and South Korea’s Kospi down 1.1 per cent.

With AP, Bloomberg

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Source: Thanks smh.com