Miners, consumer stocks drag on ASX after Wall Street retreats from records

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

The numbers

The Australian sharemarket closed Friday’s session slightly lower, weighed down by miners, consumer stocks and real estate players which dipped after US markets backed away from recent highs following warmer than expected inflation and unemployment numbers.

The S&P/ASX 200 finished 8.5 points, or 0.1 per cent, lower to 8214.5. Modest gains of around 0.3 per cent to 0.4 per cent in utilities, energy and healthcare failed to counter heavier losses in other sectors as the iron ore giants lost ground.

Stocks stormed to records in the US in large part on excitement about easing interest rates.Credit: Fairfax

The lifters

E-commerce platform Siteminder finished as the day’s best performer with gains of 5.3 per cent, followed by Regis Resources (up 4.4 per cent) and Star Entertainment Group (up 3.9 per cent).

Gold miners rallied, with Evolution Mining up 1.8 per cent and Northern Star Resources up 1.1 per cent, and Newmont Corporation climbing 2.1 per cent. Oil and gas producers were also in the green, with Woodside lifting 0.5 per cent and Santos gaining 0.6 per cent.

The laggards

Gambling company Light & Wonder wound up at the bottom of the bourse with losses of 2.4 per cent, joined by Centuria Capital Group (down 2.2 per cent) and Strike Energy (down 2.1 per cent).

Miners were the poorest performing sector (down 0.5 per cent): Fortescue Metals Group fell 1.3 per cent, Rio Tinto fell 0.2 per cent and global mining giant BHP fell 1.1 per cent. Bank shares were also slightly lower, with Commonwealth Bank shedding 0.4 per cent, Westpac dipping 0.1 per cent, National Australia Bank closing flat, and ANZ Bank lifting 0.2.

Credit: IG Markets

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The lowdown

While the Australian sharemarket closed slightly lower on Friday, it is up 0.8 per cent for the week.

AMP chief economist Shane Oliver said global shares continued to climb “the proverbial wall of worry”.

“The combination of stretched valuations, the still high risk of recession in the US and Australia, the expansion of the war in the Middle East to potentially impact oil supplies and the US election [with polling pointing towards rising prospects of a Trump victory] mean that the risk of another correction and ongoing bouts of volatility is high,” he wrote in a note.

“Global sharemarkets rose over the last week helped by the absence so far of an Israeli retaliation against Iran and hopes that it will avoid disrupting oil supplies, and hopes for a continuation of ‘Goldilocks’ – not too hot not too cold – economic conditions.”

Oliver said it was difficult to forecast geopolitical events and their impact on investment markets and making it easy to lean negative.

“So far, oil prices are up around 11 per cent from their pre-Iran attack levels and back to levels seen in August, which is just in the realm of normal volatility and not enough to significantly impact global growth or inflation,” he said.

“For Australian petrol prices it maybe adds 5¢ a litre at most, but that will be lost in the regular discounting cycles each city sees.”

Coles and Woolworths finished lower, at 0.1 per cent and 0.5 per cent respectively. Representatives from both supermarkets were called to face a Senate inquiry hearing into the cost of living, in which they were pressed by Senator Jane Hume on why Tim Tams were more expensive in the UK than they were in Australia.

“It’s probably a great question for Arnott’s, senator,” said Woolworths supermarkets & metro chief commercial officer Paul Harker.

“That’s not something that I or Coles would have visibility of at all, but I think that that’s certainly a question that would be very best directed toward Arnott’s, who would actually have that information,” said Coles head of public affairs Adam Fitzgibbons.

Overnight, the S&P 500 slipped 0.2 per cent, and the Dow Jones Industrial Average dipped 57 points, or 0.1 per cent, after it likewise set an all-time high the day before. The Nasdaq composite edged down by 0.1 per cent.

Stocks had stormed to records in the US in large part on excitement about easing interest rates, now that the Federal Reserve is cutting them from their two-decade high as it widens its focus to include keeping the economy humming instead of just fighting high inflation.

Lower interest rates ease the brakes off the economy and juice prices for investments, but the pace of further cuts will depend on if inflation continues to head down toward the Fed’s 2 per cent target as it expects.

Thursday’s report showed inflation slowed to 2.4 per cent in September from 2.5 per cent in August, according to the consumer price index, but economists were expecting an even sharper slowdown to 2.3 per cent. And after ignoring the swings for food, gasoline and other energy prices, underlying trends that economists say can be a better predictor for where inflation is heading were also a touch hotter than expected.

At the same time, a separate report showed 258,000 US workers filed for unemployment benefits last week. That number is relatively low compared with history, but it was a sharper acceleration than economists expected. Hurricane Helene and a strike by workers at Boeing may have helped make the numbers look worse.

In the bond market, Treasury yields rose immediately after the release of the economic data, only to then swing up and down as traders tried to handicap what they would mean for the Fed.

The yield on the 10-year Treasury rose to 4.1 per cent from 4.07 per cent late Wednesday. The two-year yield, which more closely tracks expectations for the Fed, fell to 3.99 per cent from 4.02 per cent late Wednesday.

Traders are still mostly convinced the Fed will cut its main interest rate by the traditional size of a quarter of a percentage point at its next meeting, according to data from CME Group.

Oil prices, meanwhile, rose to claw back their sharp giveback from earlier in the week. A barrel of Brent Crude added 3.9 per cent to $US79.59. A barrel of benchmark US crude gained 3.9 per cent to $US76.08.

That helped drive stocks in the energy industry higher, which kept the losses for US stock indexes in check. Exxon Mobil added 1.1 per cent, and Valero Energy rose 2.1 per cent.

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