ASX edges higher as Wall Street drifts to mixed close

The Australian share market has finished the month on a strong note, rallying into the close and finishing strongly.

Wall Street had a mixed session.Credit: AP

The benchmark S&P/ASX200 index on Thursday was slightly lower all morning but closed up 51.6 points, or 0.74 per cent, to 7087.3, as all sectors except energy and utilities companies advanced.

Insurance Australia Group recorded the strongest gains among large-cap stocks, lifting by 3.1 per cent as shares in insurance companies rebound. Suncorp was also among the greatest advancers, lifting 2.5 per cent.

Meanwhile, plumbing supplier Reece was up 2.7 per cent, while building materials maker James Hardie Industries and fertiliser and explosives company Incitec Pivot both climbed 2.5 per cent.

On a sector level, industrials were the best performers on the local bourse on Thursday, lifting 1.4 per cent. Transurban Group was up 1 per cent, Brambles rose 2.1 per cent, Computershare finished 1.4 per cent higher, and Qantas advanced 1.9 per cent.

The financials sector also performed strongly, up 1.2 per cent. Commonwealth Bank rallied 1.3 per cent, National Australia Bank was up 1.1 per cent, ANZ lifted 0.8 per cent and Westpac rose 1 per cent.

Iron ore heavyweights BHP, Fortescue and Rio Tinto all finished in the green, rising 0.2 per cent, 0.9 per cent and 0.4 per cent, respectively.

Utilities were the worst performers on the ASX in Thursday’s session, led by declines in Origin Energy (down 1.9 per cent) after the company’s board knocked back its North American suitors’ last-minute Plan B proposal for a takeover, saying it would “not adequately compensate” investors.

If shareholders rejected its original $20 billion offer, the consortium wants them to approve a transaction that would see it buying Origin’s energy markets business – including the Octopus retailer in Europe – for $12.3 billion, while its bidding partner EIG would launch an off-market takeover bid to gain control of 50.1 per cent of Origin. The energy giant’s board this morning dismissed the Plan B offer as “incomplete, complex and highly conditional”.

Power giant AGL fell 2.7 per cent, Meridian Energy was down 0.4 per cent and NZ electricity generator Mercury declined 2.6 per cent.

In baby formula news, Bubs Australia dropped 4.2 per cent after it issued 112,000 new shares. The company had announced a $28 million capital raising to grow its business in the US.

Wesfarmers, the operator of Bunnings, Kmart, Target and Officeworks, announced the acquisition of skin care clinics operator SILK Laser Australia to “build a leading medical aesthetics operator in Australia and New Zealand”. The move didn’t appear to impress investors much, though: The conglomerate’s share price slipped 0.1 per cent.

Sage Capital managing director Sean Fenton said the market was relatively quiet on the last day of the month.

“The [gains] were mostly driven by bond and currency markets,” he said. “The weaker US dollar helped give a little bit of lift to a few stocks – some of the more bond-sensitive stocks – but to be honest, there’s not that much going on.”

Brent crude rose 1.2 per cent to $US82.67 a barrel while iron ore lifted 0.7 per cent to $US128.20 a tonne. The Australian dollar was up 0.3 per cent at 66.39 US cents as of 4.56pm.

Overnight on Wall Street, the S&P 500 gave up an early gain and closed down 0.1 per cent. The Nasdaq composite fell 0.2 per cent and the Dow eked out a gain of less than 0.1 per cent.

Facebook parent company Meta fell 2 per cent and Google’s parent company Alphabet gave up 1.6 per cent.

General Motors surged 9.4 per cent. The carmaker announced a big stock buyback, raised its dividend and told investors it won’t have any trouble absorbing the costs of its new labour contract. The stock is still down 6.1 per cent for the year, while the S&P 500 is up more than 18 per cent.

GM and its rivals agreed to new contracts with the United Auto Workers and Canadian auto workers in late October following strikes that lasted more than a month.

Ford rose 2.1 per cent and Jeep maker Stellantis rose 5.1 per cent.

Treasury yields fell, taking more pressure off stocks. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 4.28 per cent from 4.33 per cent. The yield on the 2-year Treasury fell sharply to 4.68 per cent from 4.75 per cent.

Wall Street also received an encouraging economic update. The US economy grew at a brisk 5.2 per cent annual pace from July through September, the government reported Wednesday, an upgrade from its previous estimate of 4.9 per cent.

The revision helps give more credence to the argument that a recession was always unlikely in 2023, said Jamie Cox, managing partner for Harris Financial Group. Fears about a recession have been waning throughout the year amid strong economic reports and consumer spending.

“Below the surface though, you’re starting to see some cracks in the data,” he said. “Consumer spending having a negative impact on GDP is an unusual circumstance.”

Consumer spending, the lifeblood of the economy, rose at a 3.6 per cent annual rate from July through September. That’s still healthy, but a downgrade from the previous estimate of 4 per cent.

The report follows an encouraging survey on consumer confidence released on Tuesday.

The broader US economy has remained resilient partly because of strong consumer spending, despite lingering pressure from inflation. Wall Street will be closely watching retailers as they move through the important holiday shopping season. A record 200.4 million consumers shopped online and in stores over the holiday weekend, according to the National Retail Federation.

Sneaker and athletic apparel retailer Foot Locker rose 16.1 per cent after reporting strong third-quarter earnings and giving investors an encouraging update on its financial forecast. Several other big retailers also gained ground. Nike rose 1.5 per cent and Lululemon Athletica rose 2.5 per cent.

Investors will get another key economic update on Thursday when the government releases its 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. The Federal Reserve will meet again in December to update its interest rate policy.

Wall Street expects the Fed to keep its benchmark interest rate steady and is betting that it is finished hiking rates, which remain at their highest levels in two decades. The central bank has said it will base future rate decisions on the latest economic data, though recent statements from officials have boosted hopes that the most aggressive round of rate hikes is at an end.

”A profiteering private equity fund, looking to buy assets cheaply, using all sorts of corporate finance trickery, other people’s money, every lurk in tax minimisation, then punting assets the country needs back to investors, but at a higher price” is how former prime minister Paul Keating described North American consortium Brookfield and EIG’s battle to take over Origin Energy in an opinion piece in the Australian Financial Review.

Stage 3 tax cuts will add to inflation, forcing the Reserve Bank to lift interest rates further next year, and the government should either scrap or drastically change the tax plan, economists have warned.

with AP

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Brisbane Times – Latest News ASX higher mixed close

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