ASX breaks three-day losing streak with miners the only weak spot

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

The numbers

The Australian sharemarket has finished in the green after bright start, with technology and banking stocks setting the pace. The positive day on the local index came even as Wall Street contends with the speculation that markets have run too far after the US presidential election result was announced.

The latest inflation figures bolstered Wall Street’s bets for another rate cut next month.Credit: Bloomberg

The S&P/ASX 200 closed up 30.6 points, or 0.4 per cent, at 8224.0, with six of the 11 industry sectors advancing. Banks and IT stocks posted the biggest gains, while miners and energy stocks edged down.

The local bourse held on to its early gains after a report showed the nation’s unemployment rate held steady at 4.1 per cent for the third month in a row, with the economy adding 15,900 jobs last month. The data from the Australian Bureau of Statistics was broadly in line with market expectations, although the economy added fewer jobs than the 25,000 expected by economists.

The Australian dollar sank past a three-month low, and was buying US64.7¢, down from US65.29¢ at Wednesday’s ASX close.

The lifters

The big four banks all advanced, bolstering the local market. CBA, the nation’s biggest lender and the biggest stock on the Australian sharemarket, gained 2.2 per cent. National Australia Bank rose 1 per cent, Westpac added 1.3 per cent and ANZ rose 1.1 per cent.

Tech stocks also powered ahead, driven higher by accounting software maker Xero, which saw its shares jump 5.9 per cent after it said its net income had soared 76 per cent to $95.1 million in the September half, with its operating revenue hitting nearly $1 billion. Family-member tracking app Life 360 gained 1.5 per cent, while software maker Nuix rocketed up 10.1 per cent.

Consumer discretionary stocks also had a good session. Kmart and Bunnings owner Wesfarmers gained 1.7 per cent. Flight Centre rose 4.6 per cent after the company told shareholders at its annual general meeting that it was working its way out off a patchy first quarter. The travel agent predicted an underlying pre-tax profit of $365 million to $405 million for the full financial year.

The laggards

The mining sector declined, limiting the broader market’s advance. BHP, the world’s biggest miner, slipped 1.3 per cent, Fortescue Metals shed 1.9 per cent, while Rio Tinto went the opposite way and rose 0.2 per cent.

Gold miners Northern Star Resources and Evolution Mining dropped 5.1 per cent and 3.2 per cent, respectively, as gold prices retreated overnight.

Meanwhile, fellow gold producer Resolute Mining has suspended trading after Mali demanded the Australian gold miner pay about $160 million to resolve a tax dispute that’s seen its chief executive officer detained. The stock fell 8.1 per cent during the trading session and has tumbled 40 per cent in total since news of the detention of CEO Terry Holohan, along with two colleagues, became public at the weekend.

Resolute, which had net cash of $US146 million at the end of September, will remain in a trading halt until Monday or when the announcement is released to the market.

The lowdown

An NAB monetary policy update on Thursday said it will revert to its earlier expectation of RBA delivering a rate cut in May 2025.

“From there we continue to see a steady profile of one cut per quarter back to 3.10 per cent by mid-2026,” the update said. “The labour market has been stronger than expected and the RBA remains concerned about upside risks to inflation should gradual labour market cooling stall and capacity growth remain sluggish.”

“There are only two more employment prints and one quarterly CPI before the February 18 meeting. Given the data flow to date, it now looks unlikely the RBA will have enough confidence in the trajectory of inflation by then. There is a real risk that policy rates stay on hold even deeper into 2025.”

The broader market’s advance came after the ASX lost 0.8 per cent on Wednesday, its third day of declines amid concerns about the implications of Donald Trump’s election to the White House for the local economy and disappointment over China’s latest economic package, which investors fear doesn’t go far enough to stimulate the economy of Australia’s biggest trading partner.

On Wall Street, equities pushed higher for most of the session on Wednesday, with the S&P 500 on pace for its 52nd record this year before paring gains and ending flat. The Dow Jones Industrial Average edged up 0.1 per cent, while the Nasdaq slipped 0.3 per cent.

A US consumer price index that matched estimates brought a certain degree of relief to traders fearing that a hotter number could prevent rate cuts by the Federal Reserve. Minneapolis Fed president Neel Kashkari said that based on the headline numbers, he’s confident inflation “is headed in the right direction.”

On the bond market, shorter-dated US Treasuries outperformed, with the yield on two-year notes dropping from the highest since July. Treasury 10-year yields were up 2 points at 4.45 per cent. Swap traders boosted the probability that the Fed will cut rates again on December 18 to about 80 per cent.

“A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting,” said Seema Shah at Principal Asset Management. “A December cut is still in the cards.”

Quote of the day

“I think it’s reasonable to expect that in the US, given the policy agenda – and assuming it’s implemented substantially or in full – will be inflationary and may see rates higher for longer,” Commonwealth Bank boss Matt Comyn said after he handed down CBA’s first quarter trading update and unveiled a $2.5 billion profit for the first three months of the financial year.

You may have missed

More than a year after the Albanese government’s $15 billion National Reconstruction Fund Corporation (NRFC) was established, the fund is getting ready to announce its initial investments in “deep tech” companies, writes Technology editor David Swan.

Industry and Science Minister Ed Husic will tell the National Tech Summit in Melbourne on Wednesday that the NRFC has requested a $300 million drawdown from the government and will soon be cutting its first cheques.

With Bloomberg, AAP

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