The Australian sharemarket closed higher on Tuesday as real estate investment trusts and banks lifted the local bourse despite a negative lead from Wall Street overnight and comments from the Reserve Bank governor paring back some early gains.
The S&P/ASX 200 rose 27.6 points, or 0.4 per cent, to 7015.2 at the close despite the energy and information technology sectors trading in the red. The Australian dollar was stronger, reaching a three-month high at 66.21 US cents.
Wall Street made a losing start to its week.Credit: AP
Consumer discretionary companies (up 0.5 per cent) and consumer staples (up 0.6 per cent) gained despite the latest data from the Australian Bureau of Statistics which showed retail sales fell by 0.2 per cent in October. Lottery Corporation (up 1.4 per cent) was stronger along with supermarket giant Woolworths (up 0.9 per cent).
Shares in Collins Foods surged 9 per cent to $11.01 after the KFC franchisor delivered above market expectations, posting a 16 per cent increase in underlying earnings to $75.9 million and underlying net profit 25 per cent above consensus.
Gold companies Northern Star (up 3.3 per cent) and Evolution (up 2.8 per cent) were also stronger following a 0.5 per cent increase in the spot gold price overnight.
NAB (up 1.2 per cent) lifted the financials sector (up 0.7 per cent) after it announced a partnership with fintech lender Plenti to provide car and electric vehicle loans. Shares in Plenti surged more than 60 per cent at the close. All four big banks traded higher with CBA adding 0.8 per cent, Westpac increasing 0.8 per cent and ANZ advancing 1 per cent.
Real estate investment trusts (up 1.5 per cent) was the strongest sector as heavyweight Goodman Group gained 1.3 per cent and shares in Scentre increased 2 per cent.
On the losing end, energy companies (down 0.9 per cent) were weaker as heavyweight Woodside shed 1.6 per cent following a 0.7 per cent fall in Brent crude oil prices overnight.
Carsales.com (down 1.7 per cent), fertiliser and explosives manufacturer Incitec Pivot (down 1.4 per cent) and Mineral Resources (down 1.2 per cent) were also the weakest companies on the local bourse.
Altium (down 0.8 per cent) and Xero (down 0.8 per cent) weighed down the information technology sector which shed 0.6 per cent while TPG Telecom (down 0.9 per cent) dragged the communications sector 0.1 per cent lower.
IG Australia market analyst Tony Sycamore said comments made by Reserve Bank governor Michele Bullock pared back some the index’s strength on Tuesday.
“The ASX 200’s attempt to make amends for a soft session yesterday faded today as it gave back over half of its 62 points of early gains,” he said. “The retreat from today’s 7049 intraday high picked up in speed as RBA Governor Michele Bullock, while speaking on a panel in Hong Kong, again struck a hawkish tone, noting that inflation had been ‘stronger than anticipated and certainly more than we had forecast’,” he said.
Sycamore said consumer-facing stocks gained with softer retail sales data providing little comfort to the idea that monetary policy is not sufficiently restrictive. “However, as Black Friday and Cyber Monday sales become increasingly popular, shoppers are believed to be waiting to open their wallets to take advantage of Black Friday sales,” he said.
On Monday, the major US stock indexes ended slightly lower as Wall Street looks ahead to updates on inflation and how American consumers are feeling about the economy.
The S&P 500 fell 0.2 per cent. The benchmark index is coming off a holiday-shortened week in the US and its fourth straight winning week. The Dow Jones fell 0.2 per cent and the Nasdaq lost 0.1 per cent.
Treasury yields slipped. The yield on the 10-year Treasury fell to 4.43 per cent from 4.47 per cent.
Stocks were mixed in Europe.
Investors have grown cautiously optimistic that inflation has cooled enough for the Federal Reserve to put a definitive end to its aggressive interest rate hikes. Meanwhile, the broader economy has remained strong enough in the face of rising interest rates and inflation to avoid a recession.
Markets have been rallying on that sentiment and the S&P 500 remains on track to close out November as its best month of the year. Investors will get more updates on the economy this week to help either confirm or soften that sentiment.
On Tuesday the Conference Board issues its latest report on consumer confidence, which has remained solid throughout the year. Economists polled by FactSet expect another solid reading for the October report.
Crude oil prices fell slightly but remain mostly stable ahead of OPEC’s meeting on Thursday. The cartel has maintained tight supplies, though prices have been falling over the last month. Lower energy prices could further ease inflation’s squeeze on consumers and help fuel economic growth.
On Thursday, Wall Street will be closely watching the government’s October data on the Federal Reserve’s preferred measure of inflation. Economists expect that measure to continue easing, as it has been since the middle of 2022.
Investors have put the latest round of surprisingly good corporate earnings behind them, following several disappointing quarters. The main focus through the end of the year will be on the Fed and what it does next.
The Fed has been holding its benchmark interest rate steady at a range of 5.25 per cent to 5.50 per cent since its last quarter-point hike at its July meeting. Wall Street is betting that the rate will remain stable at the central bank’s December meeting and into early 2024, according to CME’s FedWatch tool.
Investors are increasingly leaning toward the Fed cutting rates in the middle of 2024 and easing it off its highest level in two decades. The central bank, though, has said it will make upcoming decisions based on the latest economic reports in its ongoing effort to cool inflation without slowing economic growth to the point of a recession.
“I’m more confident than maybe a year ago,” said AGL chief operating officer Markus Brokhof, with the energy producer saying it is confident there won’t be power outages over the months ahead as it fast-tracks preventative maintenance on its fleet of coal, gas and hydro generators ahead of an expected long, hot summer with high bushfire risk.
Supermarket group Aldi will not enter the bulk-buy space as competition heats up among supermarkets to offer lower prices in a cost-of-living crisis.
With AP
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