ASX trims during Friday’s trading
The Australian sharemarket trimmed during Friday’s trading as investors took stock of later than anticipated rate cuts.
The Australian sharemarket regressed slightly from a fresh high on Thursday, as expectations for a rate cut in early 2025 fell.
The benchmark ASX200 slid 8.1 points, or 0.10 per cent, to close at 8436 points, while the broader All Ordinaries index fell 0.90 points, or 0.01 per cent, to settle at 8,699.10.
The Aussie dollar finished slightly up buying 65.07 US cents.
On a mixed day for the ASX seven of the 11 sectors traded lower with gains in materials and IT, offset by falls in real estate, industrials and the healthcare sector.
Overall trading on Friday’s share market was down on a light volume, with the US markets closed due to the Thanksgiving holiday.
AMP chief economist Shane Oliver said the financial markets were now factoring in a later than previously expected rate cut.
“The RBA basically said it’s too early to cut rates. While I am a little bit more optimistic than the board, but unless we get much lower underlying inflation reading in December, then odds are they will wait until May for any rate reduction,” he said
ANZ head of Australian economics, Adam Boyton agreed with Dr Oliver pointing to the hawkish nature of RBA governor Michele Bullock’s recent comments.
“With the board still focused on the level of demand exceeding supply, our forecast for six-month annualised trimmed mean inflation to fall just within the RBA’s target band by the February meeting is no longer looking like enough,” Mr Boyton said.
Three of the big four banks were trading lower off the back of these unlikely rate cuts, which put further pressure on mortgage holders to pay back their loans.
NAB fell 1.09 per cent as was the worst of the big four, while ANZ fell 1.05 per cent. Westpac slid 0.12 per cent while Commonwealth Bank overcame falls in the morning trading to close flat at $158.58.
The price of iron ore rose during trading up, 1.6 per cent to three-week highs around $US104.70 a tonne.
This was positive for Australia’s iron ore miners with Fortescue Metals lifting 1.55 per cent to $18.99. BHP rose 1.25 per cent while Rio Tinto grew 0.94 per cent.
Dr Oliver said the price of iron ore has been trading in a range of $90 to $110 on the back of how the Chinese government chooses to stimulate the economy.
“There is speculation of more China stimulus, which now looks like it is not as good as the market was hoping for, although it’s not so bad, which is why the iron ore price has held onto half of its gains.
“The problem is any Chinese stimulus will be designed to offset Donald Trump’s stimulus package. It won’t have the same positive impact on commodities as it has in the past. A lot of the stimulus measures in the past were based on infrastructure spending. Now you could argue they have already done that and they will focus on stimulating consumer spending,” Dr Oliver said.
Travel stock Webjet was the strongest performing stock on the ASX 200, up 4.88 per cent, while Megaport limited grew 3.67 per cent.
Health care was dragged down as CSL fell 1 per cent but Pro Medicus rose 1.5 per cent to a fresh record high after its Trinity Health contract win this week. Telix pharmaceuticals and Sigma healthcare also grew 4.03 and 3.95 per cent respectively.
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