ASX jumps to record high, miners slide

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

The numbers

The Australian sharemarket has closed at its highest level for the second time in a fortnight after China reported better-than-expected quarterly economic growth.

Wall Street remains near record highs in the face of Trump’s ongoing trade wars.Credit: Bloomberg

The benchmark S&P/ASX 200 index on Tuesday finished above 8600 for the first time, rising 59.9 points, or 0.7 per cent, to 8630.3. Ten of the 11 sectors finished in the green, with materials lower.

The ASX 200’s previous highest close was 8597.7, from July 2, while its intraday record stands at 8639.1, set on June 11. The broader All Ordinaries on Tuesday gained 60 points, or 0.7 per cent, to 8875.3.

The Australian dollar was buying US65.53¢, from US65.62¢ at the close of business on Monday.

The lifters

Financials gained as three of the big four banks edged higher. Commonwealth Bank (up 0.6 per cent), Westpac (up 0.7 per cent) and ANZ Bank (up 0.7 per cent) all ended the session stronger. NAB closed flat, down 0.1 per cent.

Technology shares rose after Wall Street’s Nasdaq closed at a fresh record overnight. Life360 surged 8 per cent, WiseTech was up 1.8 per cent and Hub24 jumped 6.4 per cent after the wealth management platform announced strong growth in the fourth quarter, with funds under administration climbing $5.3 billion.

The energy sector was stronger, with Woodside and Santos up 0.5 per cent, and Ampol 2 per cent higher, but Yancoal slipped 0.2 per cent. The biggest mover was Paladin Energy, up 7.9 per cent.

The laggards

Mining stocks retreated. Rio Tinto lost 1.3 per cent, BHP dropped 0.9 per cent and Fortescue gave up 0.7 per cent.

Eftpos providers fell, with Tyro Payments down 2.7 per cent and Smartpay Holdings dropping 1.4 per cent, after the Reserve Bank on Tuesday released its review into card surcharges and is proposing a ban on surcharges to all credit and debit card transactions from July next year.

The lowdown

The Australian sharemarket gained following a positive lead from Wall Street, which advanced after US President Donald Trump’s latest updates to his tariffs, and news that China’s economy grew more than expected.

In China, the National Bureau of Statistics reported that the world’s second-biggest economy grew at 5.2 per cent in the June quarter, slightly better than consensus estimates of 5.1 per cent growth. That resilience provides Beijing with breathing room to prepare a further policy response in case trade tensions with Washington flare up again when the current tariff truce ends in mid-August.

Prime Minister Anthony Albanese meets Chinese President Xi Jinping at the Great Hall of the People in Beijing.Credit: Dominic Lorrimer

Van Eck cross-asset strategist Anna Wu said that stronger Chinese industrial and business activity would mean greater demand for Australian exports, which flows directly into corporate earnings and ASX valuations.

“Australian equities are essentially downstream beneficiaries of what happens next in Beijing,” Wu said.

Australia’s exports to China, its largest trading partner, span agriculture and energy but are dominated by iron ore, and Prime Minister Anthony Albanese has travelled with executives from mining giants Rio Tinto, BHP, and Fortescue, who met Chinese steel industry officials on Monday, at the start of the six-day visit.

The local sharemarket also had a boost after a survey of Australian consumer sentiment posted another modest gain despite last week’s surprise move on interest rates.

Consumer confidence edged higher in July as households’ assessment of their financial position improved even after the Reserve Bank shocked markets by keeping interest rates unchanged.

Sentiment advanced by 0.6 per cent to 93.1 points, a Westpac Banking survey shows.

“Australia’s consumer sentiment recovery experienced another ‘false start’,” said Matthew Hassan, Westpac’s head of Australian macro forecasting. “While the mood improved a touch for the month as a whole, responses over the survey week show a clear disappointment following the RBA’s surprise move.”

The Reserve Bank has lowered borrowing costs twice this year and wrong-footed investors a week ago when it kept the cash rate at a two-year low of 3.85 per cent, rather than cut. Governor Michele Bullock said the difference with the market was one of timing rather than direction, suggesting further easing is likely.

Traders are pricing two more rate cuts this year with a slight chance of a third.

“Indeed, even with the RBA’s July surprise, consumers have become slightly more confident that interest rates will continue to move lower over the next year,” Westpac’s Hassan said.

Stock indexes elsewhere around the world were mixed in their first trading after Trump announced plans over the weekend for 30 per cent tariffs on goods from Mexico and the European Union. They won’t take effect until August 1, the same deadline that Trump announced last week for updated tax rates on imports from Japan, South Korea and a dozen other countries.

The latest postponements for Trump’s tariffs allow more time for him to reach trade deals with other countries that could lower the tariff rates and prevent pain for international trade. They also feed into speculation that Trump may ultimately back down on his tariffs if they end up creating too much damage for the economy and financial markets.

For the time being, all the uncertainty around tariffs could help keep markets unsteady. This coming week has several potential flashpoints that could shake things up.

On Tuesday, the latest reading on inflation across the US is expected. Economists expect it to show inflation accelerated to 2.6 per cent last month from 2.4 per cent in May.

“Broader markets are still cautious with US CPI tonight along with US earnings keeping things range-bound for now,” said Billy Leung, investment strategist at Global X ETFs in Sydney. “Bear in mind that we also have ongoing trade risks with letters still yet to be received by several US trade partners – and new potential tariffs on EU, Russia and Mexico.”

Bitcoin fell as traders cashed in after a record-breaking rally sent the top digital token above the $US120,000 milestone. The cryptocurrency declined as much 4 per cent, the most in more than three weeks, and was trading at $US117,191 at 3.50pm, according to Bitstamp on Tuesday.

This coming week is “crypto week” in Washington, where Congress will consider several bills to “make America the crypto capital of the world”.

Tweet of the day

Quote of the day

‘Shareholders airing their various grievances about executive behaviour at top 20 companies is pretty unusual. And drawing attention to a chief executive’s drinking as a red flag is even rarer’

Elizabeth Knight writes after a report that some major shareholders had expressed concerns about National Australia Bank chief Andrew Irvine’s drinking and management style.

With AAP, AP, Bloomberg

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