IT, financials drive the ASX higher

The Australian market is up for the first time this week due to the information technology and financial sectors.

The Australian sharemarket broke a three-day losing streak, with information technology and financials driving the market higher.

The benchmark ASX 200 index gained 30.60 points or 0.37 per cent, to finish the session at 8224 points.

The broader All Ordinaries rose by 29 points, or 0.34 per cent, to close at 8479 points.

The Australian dollar fell 0.72 per cent to 64.86 US cents during Thursday’s trading.

eToro’s market analyst Josh Gilbert said the Australian market as a whole was trading higher due to some positive momentum coming out of Wall Street and company earnings.

“We had good company earnings, with James Hardie with good results yesterday, Xero with good results today and Flight Centre with a decent market guidance out of its AGM, so individual stocks doing well lifting the market higher.

SYDNEY, AUSTRALIA – NewsWire Photos November 3, 2021: General scenes from the Australian Stock Exchange in Sydney. Picture: NCA NewsWire / Jeremy Piper

The financial sector as a whole, which is one of the largest ones, was up 1.37 per cent, which outweighed weakness coming out of the resources sector.

“There was also some positivity out of big names like Commonwealth Bank, up about 2 per cent and when you have a big name like that driving the index it’s always going to be positive today. and that is always going to drive the market,” he said.

Westpac, ANZ and NAB all reported strong days as well, up 1.34, 1.15 and 1.04 per cent respectively.

“We are starting to see inflation subside in Australia and wage growth which is coming down remains strong and consumer confidence has picked up,” he said.

“Consumers are starting to feel a bit more optimistic and that will flow through everything including paying back mortgage, interest payments as things aren’t as bleak as the markets might think.”

Xero shares hit a record high, up 5.85 per cent to 171.00 at Thursday’s close after better than expected half year results pleased investors.

“Margins continued to impress as its costs-to-revenue ratio improved, reaching 71 per cent, much lower than the 79 per cent last year,” Mr Gilbert said.

Xero’s stronger than expected result helped drive the Information Technology sector up 1.98 per cent, and was the strongest on the ASX.

Resource shares struggled off the back of a weak China stimulus package. Picture: NCA NewsWire / Jeremy Piper

Overall, 8 of 11 sectors ended higher along with the S & P/ASX 200 Index with only materials, energy and healthcare trading lower.

Mr Gilbert said the Australian materials sectors continue to struggle due to the China story, with an underwhelming stimulus package continuing to flow through markets.

Last Thursday China announced a $1.4 trillion package over five years to tackle local governments’ ‘hidden’ debt, which Aussie markets have seen as unfavourable.

“This was a bigger package but we thought it needed a little more support for consumers to support economic growth,” Mr Gilbert said.

“There could be contrarian buys for the material sector, if we do get that stimulus package with a bit of profit taking from financials into materials.

Gold miners West African Resources and Vault Minerals stumbled on the ASX during Thursday’s trading, as the underlying gold price fell due to a stronger US dollar.

Domino’s Pizza was also among the weakest shares on the ASX down 5.587 per cent to $28.56.