Retailers and banks lift ASX higher; inflation steady in October

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

The numbers

The Australian sharemarket closed in the green on Wednesday, powered by the consumer and real estate sectors, as investors digested the news of headline inflation holding steady in October, lower than predicted by economists.

The S&P/ASX Index 200 rose 47.3 points, or 0.6 per cent, to 8406.7 points at the close, after losing 0.7 per cent on Tuesday. All 11 industry sectors advanced in a broad rally. Meanwhile, the Australian dollar added 0.1 per cent, to trade at 64.78 US cents at 4.37 PM AEDT.

Wall Street has climbed despite Donald Trump’s tariffs threat.Credit: AP

The lifters

Consumer discretionary stocks (up 1 per cent) were among the best performers on Wednesday, buoyed by rises from Kmart and Bunnings owner Wesfarmers (up 0.6 per cent), Harvey Norman (2.3 per cent) and JB Hi-Fi (0.8 per cent).

Web Travel shares (up 13.5 per cent) was the big winner. The travel business’ underlying half-year profit slipped 6 per cent to $52.5 million, and it predicted full-year earnings to land between $117 million to $122 million. The results come two months after shareholders voted for the company to split off its consumer businesses into a separate entity.

All major real estate stocks pushed up, led by Goodman Group (up 0.8 per cent), Scentre Group (up 0.5 per cent), and Charter Hall (up 1.2 per cent).

Early gains on the ASX were driven by a strong performance by the big four banks, which enjoyed a strong open after a difficult day of trading on Tuesday. Commonwealth Bank – the largest stock on the ASX – rose 2 per cent, while ANZ (up 0.3 per cent), Westpac (up 0.6 per cent) and NAB (up 0.1 per cent) all posted gains.

WiseTech, the biggest tech stock on the ASX, rose 0.4 per cent. Analysts expect the logistics software maker to shrug off its governance issues including scrutiny of embattled founder Richard White, after an ongoing review cleared the billionaire entrepreneur of serious misconduct. Meanwhile, family-member tracking app Life 360 climbed 6.2 per cent.

The laggards

Mining giants BHP shed 0.2 per cent of share value, and were joined in the red by James Hardie (down 2.1 per cent) and Amcor (down 0.9 per cent). Rio Tinto added 0.1 per cent, and Fortescue (up 1.9 per cent) finished in the green.

The health care sector advanced by less than 0.1 per cent, with Pro Medicus (down 0.7 per cent) and Resmed (down 0.6 per cent) both retreating. The industrial sector was weighed down by losses from Qantas (down 1.6 per cent), but still advanced on the day.

The lowdown

The latest inflation numbers were released on Wednesday morning, with the headline number holding steady at 2.1 per cent. The figure was lower than the market’s consensus forecast of 2.3 per cent, and reflected a fall in household energy spending triggered by recent government subsidies.

However, the Reserve Bank’s preferred measure of underlying inflation increased to 3.5 per cent in the 12 months to October, from 3.2 per cent in September. The Reserve Bank wants inflation to “sustainably” head down before it would start cutting rates.

HSBC Australia’s chief economist Paul Bloxham said the inflation figures came as no surprise, and would embolden the Reserve Bank’s belief that underlying inflation was still too strong.

“Cutting household’s electricity bills adds to household disposable incomes as they then have more money to spend on other things and this is likely to add to core inflation, rather than subtract from it,” Bloxham commented following the inflation announcement.

In the US, Wall Street looked past Donald Trump’s tough tariff talk and welcomed the news of Israel and Hezbollah reaching a ceasefire.

In New York overnight, US stocks rose to record highs after Trump’s latest talk about tariffs created few ripples on Wall Street, despite their potential to roil the global economy were they to take effect.

The S&P 500 climbed 0.6 per cent to top the all-time high it set a couple of weeks ago. The Dow Jones added 0.3 per cent to its own record set the day before, while the Nasdaq composite gained 0.6 per cent as Microsoft and Big Tech led the way.

Other international markets were down, but mostly only modestly, after President-elect Trump said he plans to impose sweeping new tariffs on Mexico, Canada and China as soon as he takes office.

Trump has often praised the use of tariffs, but investors are weighing whether his latest threat will actually become policy or is just an opening point for negotiations. For now, the market seems to be taking it more as the latter.

In the crypto market, bitcoin continued to pull back after topping $US99,000 for the first time late last week. It’s since dipped back toward $US91,000, according to CoinDesk. It’s a sharp turnaround from the bonanza that initially took over the crypto market following Trump’s election.

Tweet of the day

Quote of the day

“It would be disingenuous and dishonest to blame renewables when you have five units out – four of them coal, two of them breakdowns – when you consider we have not had a day in the last 18 months where there hasn’t been a breakdown in a coal-fired power unit across the national energy market.”

Energy Minister Chris Bowen during question time, when asked about a heightened risk of electricity blackouts for NSW by the opposition.

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With AP

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