ASX closes on a high as CBA, mining stocks rally

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

The numbers

The Australian sharemarket closed higher on Friday, with stocks soaring across industry sectors to help maintain gains throughout the day. A record high from Commonwealth Bank boosted the local index, while mining stocks rallied as investors kept an eye on expectations of a stimulus boost from China.

The S&P/ASX 200 finished the day up 68.8 points, or 0.8 per cent, at 8295.1, with 10 of the 11 industry sectors closing in the green. The market was bolstered by another strong session on Wall Street following the Federal Reserve’s decision to cut interest rates once again.

An initial public offering might not be the best funding option.Credit: Dominic Lorrimer

The lifters

The mining giants made a bright start on Friday but had pulled back slightly by day’s end, with BHP, Rio Tinto and Fortescue each finishing higher, up 0.1 per cent, 1.4 per cent and 0.3 per cent respectively. Evolution Mining took the title of best-performing large-cap stock in the sector, up 2.1 per cent.

Information technology was the best-performing sector on the index, up 1.8 per cent, with Wisetech closing 1.8 per cent higher, a 1.2 per cent gain for Xero, and a 2.2 per cent jump for NextDC.

Shares of biotech firm Neuren Pharmaceuticals skyrocketed 15.1 per cent after the company reported strong US sales of its Daybue drug. The company announced that sales for the first nine months of the year had already surpassed the full-year target of $US250 million ($376 million). The company now expects total 2024 revenue to range between $216 million and $218 million.

Sigma Healthcare’s stock rose for a second consecutive day, up 4.5 per cent following news of the competition watchdog approving its merger with Chemist Warehouse. The $8.8 billion deal will create a giant controlling 16 per cent of Australia’s pharmacies, or about 700 locations.

Commonwealth Bank – the largest company listed on the ASX – made a late surge to close 1.4 per cent higher. ANZ reversed its early losses to increase 1.3 per cent. The bank had announced an 8 per cent slide in cash profits to $6.7 billion compared with last year’s record.

The remaining big banks, National Australia Bank and Westpac, rose 0.8 per cent and 2 per cent, respectively, to end the day.

The laggards

Mineral Resources closed flat following news that HESTA, the $88 billion superannuation fund, had moved to place the miner on its “watchlist” over governance concerns.

The fund announced it has been in talks with the mining company regarding governance issues linked to Chris Ellison and other executives using offshore companies for a markup scheme between 2003 and 2009.

The energy sector was the only industry sector to end the day in the red, down 0.5 per cent, with Woodside (down 0.7 per cent) and Santos (down 0.2 per cent) both declining.

Block Inc, the owner of Afterpay, tumbled 6.1 per cent despite announcing a 19 per cent increase in profits for the September quarter, reaching $US2.25 billion ($3.37 billion). The profit gains were overshadowed by the company’s total net revenue of $US5.98 billion in the reported quarter, which missed Wall Street’s expectations of $US6.24 billion.

The lowdown

The local index spent Friday’s session firmly in the green, as the US election outcome continued to generate more steam for global markets. Investors are keenly awaiting news of a stimulus boost from China as the National People’s Congress Standing Committee reaches the final day of its five-day meeting, which AMP deputy chief economist Diana Mousina said should provide more clarity around the level and detail of fiscal stimulus.

In the US, most stocks rose on Thursday, with the S&P 500 climbing 0.7 per cent to add to its surge from the day before following Donald Trump’s presidential victory. The Dow Jones was virtually unchanged and edged down by less than a point, while the Nasdaq composite rallied 1.5 per cent.

The US Fed’s announcement that it was easing its main interest rate caused few ripples in the market because even the precise size of it was so well anticipated by investors.

The US central bank began easing rates in September and indicated more cuts were likely to come as it focuses more on keeping the job market humming after helping get inflation down nearly to its 2 per cent target. What’s less certain in the minds of investors now is how much Trump’s victory may upset the Fed’s plans.

Federal Reserve chair Jerome Powell said that “in the near term, the election will have no effects” on interest-rate policy.Credit: Bloomberg

Trump is pushing for tariffs and other policies that economists say could drive inflation higher, along with the economy’s growth. Traders have already begun paring forecasts for how many cuts to rates the Fed will deliver next year because of that. While lower rates can boost the economy, they can also give inflation more fuel.

Mousina said Australia operates on a trade deficit with the US, meaning Australia imports more from the US than it exports there, which could protect Australia being hit directly by tariffs. But tariffs could affect global trade.

“The impact from US tariffs will be more on the impact to global trade – likely to be a negative – and the larger impacts on China, which are likely to be hit by larger tariffs which could lead to lower Chinese exports and therefore lower demand for raw commodities – which will hurt Australia,” she said.

Mousina said the risk is that countries such as China, as well as Europe, will impose tariffs similar to 2018, which would lead to market uncertainty and concern about a global trade war and would hit economic growth.

“But we don’t know how other countries would respond and if the tariff route is actually Trump’s ‘maximum-pressure’ strategy to get direct investment into the US economy, bypassing the tariff,” she said.

”As well, if China is hit with large tariffs, which weakens growth, Australia may be able to find other markets for its exports … and China may respond with large stimulus packages to offset the negative hit to the economy.

“Basically, there are so many known unknowns and even unknown unknowns [that] it’s not time to hit the panic button just yet.”

Tweet of the day

Quote of the day

“I think Australia is further along into the next phase of the cashless economy than most regions.”

That’s Afterpay co-founder Nick Molnar speaking about Australia’s future of becoming a cashless society. 

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with AP and Reuters

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