ASX gains, led by banks and tech stocks; REA, gold miners wobble

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket gained pace in the afternoon after a lacklustre morning, following US market futures higher after Donald Trump extended a deadline on his euro area tariffs, leaving investors guessing yet again by the president’s trade threats and subsequent backtracking.

The S&P/ASX 200 climbed 46.60 points, or 0.6 per cent, to 8407.60, boosted by banks, consumer discretionary stocks and tech shares, while miners and property trusts declined. The local market had edged up by 0.1 per cent on Monday.

The Australian dollar dipped overnight after hitting six-month highs on Monday, and was down 0.05 per cent at 64.83 US cents at the time the sharemarket closed.

European markets took centre stage with Wall Street closed.Credit: Getty Images

The lifters

Tech shares were the day’s best performers, led by a 2.2 per cent rise for the biggest IT stock on the ASX, WiseTech Global. The company was up for a second day after it announced its acquisition of US-based supply chain software company e2open, a deal it hopes will turn it into a global powerhouse.

But it was banks that drove the ASX higher in the afternoon, with CBA - the nation’s biggest lender and the biggest stock on the market - up another 0.8 per cent. The other Big Four banks also rose. National Australia Bank was up 0.9 per cent, Westpac 1.7 per cent and ANZ Bank 1.4 per cent.

The consumer discretionary sector also paced ahead as investors moved from defensive industries such as utilities and consumer staples into more growth-dependent stocks. Bunnings and Officeworks owner Wesfarmers added 0.3 per cent, pokies maker Aristocrat climbed 1.9 per cent and electronics retailer JB Hi-Fi rose 1 per cent.

Energy stocks rose, with oil and gas giant Woodside up 0.6 per cent, as oil prices steadied, with the market weighing the prospect for now easing trade tensions between the European Union and the US ahead of an OPEC+ meeting that will decide on supply policy. Other fossil fuel players rose as well, with refiner Ampol up 1.8 per cent, Yancoal up 1.6 per cent and Whitehaven up 1.1 per cent.

Telstra reversed early losses and finished up 0.4 per cent after reaffirming its full-year earnings forecast of $8.5 billion to $8.7 billion.

While the telco unveiled a plan to boost its return on capital and reach mid-single digit compound annual growth in cash earnings over the next five years, it warned it may consider partially franked dividends in the future as its “franking balance is tight”.

Insurance giant IAG rose 0.7 per cent. The insurer said it has received 2500 claims from the flooding on the NSW mid-north coast and Hunter region last week. The company behind brands including NRMA insurance and CGU said it was still too early to estimate the full cost of those claims.

The laggards

The materials sector declined, weighed down by the gold miners. The price for bullion extended as demand for haven assets cooled amid hopes for improving trade relations between the US and the EU. Northern Star Resources fell 1.5 per cent, Evolution Mining slumped 3.1 per cent, and Newmont - which was trading ex-dividend - lost 1.6 per cent.

Digital real estate listings giant REA Group fell 3.5 per cent after telling investors it was cooperating with the corporate watchdog over claims of price gouging. The News Corp-controlled business said it was served a notice by the ACCC to supply information regarding some of its subscription offerings, but was unable to comment on the scope of the questions. The Australian Financial Review reported the query pertains to allegations it has used its market dominance to price gouge.

The lowdown

The ASX’s gain came after the STOXX Europe 600 index erased Friday’s losses sparked by Trump’s threat of 50 per cent tariffs on the European Union. The US president later said he had agreed to delay the date for the levies to July 9. Germany’s DAX jumped 1.7 per cent and France’s CAC 40 finished 1.3 per cent higher in response to the reprieve.

Wall Street was closed for Memorial Day overnight, but futures for the S&P 500 and the Nasdaq 100 advanced more than 1 per cent, holding their gains from the holiday.

The tariff war returned as a major driver once again after concerns about Trump’s proposed tax cuts, and their impact on the US deficit, churned markets much of last week. Trump’s whiplash moves have increased uncertainty in markets and his broadside against Europe on Friday, followed by a backtrack, was a stark reminder of the president’s volatile policymaking.

“Investors know this act by heart,” Stephen Innes of SPI Asset Management wrote in a market commentary. “The volatility is still there, but like a horror franchise on its fifth sequel, the jump scares are losing their bite. Panic-selling into a Trump pirouette doesn’t pay like it used to — markets have seen this dance before.”

However, Frederic Rozier, a portfolio manager at Mirabaud France, said that “one thing that is starting to concern us a bit is the fact that the rebounds that follow these selloffs are losing strength as we go on. We can sense investor fatigue about this back-and-forth and there’s a risk sentiment will erode as markets run in circles on tariffs.”

With the tariff argy-bargy going in circles, local investors also turned their attention to the upcoming inflation figures on Wednesday. The Australian Bureau of Statistics’ monthly consumer price index indicator is expected to show inflation continuing to cool further, leaving the door open for more Reserve Bank interest rate cuts as the year progresses.

“CPI numbers should confirm what the RBA have already told us, that the disinflation process remains in place,” IG Market analyst Tony Sycamore said. “So that’s going to keep prospects alive for rate cuts in July and August.”

with Bloomberg, AAP

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