ASX bounces on Wall Street rally and AGL profit guidance

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

The numbers:

The Australian sharemarket has built on its early gains, with energy and technology companies boosting the market after Wall Street hit a 14-month-high overnight.

The S&P/ASX 200 was up 75.9 points, or 1.1 per cent, to 7251.2 at the close as all sectors except healthcare traded in the green.

Wall Street is on its way to another bumper week.Credit: Bloomberg

The lifters:

Energy companies (up 3.5 per cent) did the heavy lifting for the local bourse as coal miners Whitehaven (up 8.3 per cent) and Yancoal (up 3.6 per cent) both rallied. Heavyweights Woodside (up 3.5 per cent) and Santos (up 4.1 per cent) also advanced after crude oil prices increased 3.5 per cent overnight.

Utilities (up 1.2 per cent) advanced as AGL soared 14.7 per cent after it said it is expecting to more than double its earnings in the coming year as a result of higher electricity prices and increased plant production.

Technology companies (up 1.5 per cent) also continued to extend gains with Xero (up 2.6 per cent), NEXTDC (up 1.6 per cent) and WiseTech (up 1.2 per cent) climbing.

Lithium players were also higher with Liontown (up 8.3 per cent) and Pilbara Minerals (up 4.9 per cent) among the biggest large-cap advancers.

The Australian dollar is sharply higher, fetching 68.96 US cents at the close.

The laggards:

Healthcare companies (down 0.1 per cent) were the weakest of the pack as CSL (down 0.6 per cent) continued to fall after downgrading its net profit expectations.

Infrastructure investment company Infratil (down 1.2 per cent), Amcor (down 0.7 per cent) and Ampol (down 0.5 per cent) were among the biggest large-cap decliners.

The lowdown:

TMS Capital portfolio manager Ben Clark said it was a “risk on” day for markets on Friday, with investors moving towards growth companies.

“The market was unexpectedly strong and ended close to a high,” Clark said. “But when banks and resources go up together, the ASX usually moves up.”

Clark said the strength in resources was on the back of a rate cut in China, where he said the government was clearly trying to stimulate the economy. “It’s the only country in the world without an inflation issue and the only major one in a rate-cutting cycle.”

Meanwhile, investors moved away from defensive growth stocks such as those in healthcare, Clark said, with biotechnology giant CSL’s profit downgrade on Wednesday continuing to weigh on sentiment.

European Central Bank president Christine Lagarde. The ECB has raised its interest rates to its highest level in 22 years Credit: Bloomberg

US stocks swept higher overnight, revving the longest rally for Wall Street in a year and a half into a higher gear.

The S&P 500 rallied 1.2 per cent to reach heights untouched since April 2022. The Dow Jones climbed 428 points, or 1.3 per cent, while the Nasdaq composite rose 1.1 per cent.

The European Central Bank raised rates on Thursday and pledged more may be on the way, including at its next meeting in July, as it keeps up its battle against inflation. ECB interest rates are now at their highest level in 22 years.

The stock market is still absorbing the Federal Reserve’s warning from a day earlier that it could raise interest rates two more times this year in its battle against inflation.

It’s already hiked its benchmark rate to the highest level since 2007, which has helped slow inflation somewhat but has also caused severe pain in some areas of the economy.

The Fed is trying to find the right level for rates, where it can slow spending by Americans enough to get inflation under control but not so much that it causes a deep recession. Economic reports on Thursday offered a mixed picture of how that effort is going.

But for a market that’s been relentlessly rising, that was enough to firm hopes that the Fed may end up raising rates only once this year, and that the economy can skirt a painful recession.

Tweet of the day:

Quote of the day:

“Not only did Crown breach its obligations by claiming tax deductions to which it was not entitled, Crown also made significant efforts at concealment,” VGCCC chairperson Fran Thorn said, after Crown Resorts was fined $20 million in Victoria.

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With AP

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