ASX eyes record; Boral jumps on Seven bid, A2 Milk soars

By Sumeyya Ilanbey
Updated

The Australian sharemarket almost hit an intraday record high at lunchtime on Monday, shrugging off a soft Wall Street lead.

The S&P/ASX 200 lifted 5.9 points, or 0.08 per cent, to 7664.2 points about 1.05pm. The local bourse climbed to 7683 just after 12pm, just 20 points shy of its intraday high of 7703.6 points on February 2.

The ASX has edged higher on Monday to kick off a busy week of results.
The ASX has edged higher on Monday to kick off a busy week of results.Credit: Louie Douvis

A rally in mining (up 0.66 per cent) and industrials (up 0.52 per cent) stocks largely offset the significant losses in real estate investment trusts, which tumbled 2.62 per cent. All mega-cap REITs fell, but Lendlease (down 16.38 per cent) was the worst hit after reporting a net loss of $136 million in the first half of fiscal year 2024, compared to a loss of $141 million in the same period last year.

Boral was the leading large-cap advancer after its shares rose 4.27 per cent when Kerry Stokes’ Seven Group made an offer to buy the remaining 28.4 per cent stake in Boral it doesn’t already own. The construction material giant’s shares were trading at $6.09 at about 1.05pm.

QBE (up 2.95 per cent), Westpac (up 2.6 per cent), South32 (up 2.26 per cent) and Mercury NZ (up 2.21 per cent) rounded out the top five large-cap advancers.

On the flipside, BlueScope Steel (down 3.33 per cent) was the weakest mega-cap stock, followed by Bendigo and Adelaide Bank (down 2.78 per cent) and IGO (down 2.54 per cent).

It is a busy week for the ASX with 80 major listed companies scheduled to report earnings over the next few days.

Westpac reported $1.5 billion in cash profit over the first quarter of its calendar year, 6 per cent lower than the average of its two previous halves.

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A2 Milk’s first-half profits jumped 15.6 per cent compared to the same period last year, beating analysts’ expectations. A2 Milk’s English-label products have gained more market share through online channels as the daigou market continues to decline. Shares soared 16.04 per cent.

BlueScope reported half-yearly profits of $439 million but warned the outlook for the second half is slightly below the first six months of FY24.

The S&P 500 fell 0.5 per cent from its all-time high set a day earlier. The Dow Jones 0.4 per cent, and the Nasdaq composite sank 0.8 per cent.

A report in on US inflation at the wholesale level gave the latest reminder that the battle against rising prices still isn’t over. Prices rose more in January than economists expected, and the numbers followed a similar report from earlier in the week that showed living costs for US consumers climbed by more than forecast.

Treasury yields rose immediately after the report’s release, adding pressure onto the stock market.

The data kept the door closed on hopes that the Federal Reserve could begin cutting interest rates in March, as traders had earlier hoped. It also discouraged bets that a Fed move to relax conditions on the economy and financial markets could come even in May.

The recalibrated bets for cuts to rates have simply brought Wall Street’s forecasts closer to what the Federal Reserve has been outlining. Critics have been saying traders’ expectations had gone overboard in how quickly and how much the Fed could cut rates in 2024.

The wide expectation for the Fed’s next move is still for a cut to its main interest rate, which is at its highest level since 2001, as it’s said it likely will do.

Wall Street recorded a rare losing week.
Wall Street recorded a rare losing week. Credit: Bloomberg

“Markets are likely to take a well-deserved breather following a staggering rally since October, though the lack of emotional reaction to elevated inflation readings and shifting Fed expectations reflect the optimism of investors,” said Mark Hackett, Nationwide’s chief of investment research,

In the meantime, the hope is that the economy continues to remain solid despite the challenge of high interest rates.

A preliminary report on Thursday suggested that sentiment among US consumers is rising, though not by quite as much as economists hoped. That’s key because spending by consumers makes up the bulk of the economy.

In one potentially discouraging signal, the report from the University of Michigan also said that expectations for inflation in the coming 12 months ticked up to 3 per cent in February from 2.9 per cent in January.

If the economy does remain resilient, it would allow companies to deliver growth in profits, which can prop up stock prices.

Cryptocurrency company Coinbase Global leaped 8.8 per cent after it reported much better results for the latest quarter than forecast. Higher crypto prices helped drive more transaction revenue for the company.

With AP

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Source: Thanks smh.com