Tech stocks lift ASX after Wall Street savours AI boost

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

The numbers

The Australian sharemarket closed in the green after technology stocks pushed the market higher, following a positive lead from Wall Street overnight where US stock indexes hit fresh highs.

The ASX/S&P 200 ended 0.2 per cent, or 12.3 points, up at 8474.9 points, with six of the 11 industry sectors closing higher. The information technology sector was the local market’s best performer, up 1.1 per cent, while energy was the weakest sector, declining by 1 per cent.

The Australian dollar was trading marginally stronger, at 64.33 US cents as at 4.18pm AEDT.

Wall Street set the tone for the trading day on the Australian sharemarket.Credit: AP

The lifters

Banks and retailers led the advance in early trading and continued to boost the index into the afternoon, with the financials and consumer discretionary sectors ending the session 0.4 per cent and 1.1 per cent higher respectively.

Financial stocks pushed ahead, with Commonwealth Bank – the biggest stock on the Australian sharemarket – closing up 0.7 per cent. Westpac remained in the green throughout the day, rising 0.5 per cent and Macquarie added 0.3 per cent.

NAB, however, slipped into the red, down 0.3 per cent. ANZ reversed some of the day’s early losses by midday, closing largely flat.

Consumer discretionary stocks helped boost the market throughout the day, with Wesfarmers, the owner of Bunnings, Officeworks and Kmart, up 1.3 per cent. JB Hi-Fi also added 1.3 per cent, while kitchen appliances maker Breville climbed 3.7 per cent.

Tech stocks followed their peers on Wall Street higher, with Afterpay owner Block jumping 5.6 per cent, accounting software maker Xero up 0.8 per cent, and enterprise software firm Technology One gaining 2.8 per cent.

Embattled tech firm WiseTech Global, the biggest IT stock on the ASX, added 1.9 per cent amid revelations by this masthead that its former boss, Richard White, and his wife, Zena Nasser, have been making quiet changes to private investment companies and share trusts.

Supermarket giants Coles and Woolworths both traded higher throughout the day, up 1.5 per cent and 0.8 per cent respectively.

The laggards

The energy and materials sectors failed to join the wider market advance, ending down 1 per cent and 0.2 per cent respectively. Oil and gas giants Woodside and Santos both fell by roughy 1 per cent, while iron ore miner BHP also declined, down 1.1 per cent.

Rio Tinto rose 0.6 per cent, despite tracking down during the day, having told investors in London on Wednesday that it will step up its copper production to 1 million tonnes a year by the end of the decade, from a projected 720,000 tonnes in 2024, to become less dependent on iron ore.

The miner also knocked back demands by an activist investor to ditch its dual listing structure and have its shares only on the Australian market, saying ditching the structure didn’t make any economic sense.

Sleep apnoea treatments maker Fisher & Paykel shed 1.7 per cent as it traded ex-dividend.

The lowdown

The Australian sharemarket recouped most of the previous day’s losses after a rally on Wall Street as tech firms talked up the expected boost to their profits from AI, and the chairman of the US Federal Reserve talked up the health of the world’s largest economy.

All the optimistic talk helped Nvidia, the company whose chips are powering much of the move into AI, to rally by 3.5 per cent. It was the strongest upward force on the S&P 500 by far.

Overnight, Federal Reserve chairman Jerome Powell told a business event the US economy was in “very good shape and there’s no reason for that not to continue”.

When the Fed began cutting its rate-cutting cycle in September with a double-sized cut, the central bank had cited potential deterioration in the US job market, spooking markets. Powell walked back those comments overnight, saying the downside risk to the US labour market was less than policymakers thought, and growth had been “definitely stronger than we thought”.

The gist of Powell’s remarks suggested a slower pace of rate cuts, though expectations of a rate cut at the Fed’s December 17-18 meeting increased slightly following his comments.

The S&P 500 climbed 0.6 per cent to add to what’s set to be one of its best years of the millennium. It’s the 56th time the index has reached a new peak this year after climbing in 11 of the past 12 days. The Dow Jones rose 0.7 per cent, while the Nasdaq composite added 1.3 per cent to its own record.

As the US and then the Australian sharemarkets advanced, cryptocurrency bitcoin rose above $US100,000 for the first time, spurred on by hopes for pro-crypto regulations after Donald Trump’s election victory.

Bitcoin has more than doubled in value this year and is up about 45 per cent since Trump’s sweeping election win on November 5. A slew of pro-crypto politicians was elected to Congress at the same time.

About 2pm AEDT on Thursday, bitcoin crossed the $US100,000 mark, hitting a new peak of $US100,027 ($155,520). And it kept rallying, trading at $US102,585 at 4.56pm on Bitstamp.

This week’s highlight for Wall Street will be Friday’s jobs report from the US government, which will show how many people employers hired and fired last month.

A narrower report released on Wednesday morning suggested employers in the private sector increased their payrolls last month by less than economists expected.

Tweet of the day

Quote of the day

“Their attacks are not about locking up systems and extracting fast profits like many of the cyber incidents we read about in the media. Instead, these are covert, state-sponsored cyber espionage campaigns that use hard-to-detect techniques to get inside critical infrastructure and stay there, potentially for years. Waiting to steal sensitive data or even disrupt or destroy assets in the event of future conflict with Australia.”

That’s CyberCX executive Grant Walsh speaking about the motives behind Chinese state-linked hacking group, “Salt Typhoon”.

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with AAP, AP, Reuters

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