ASX closes higher as Coles, Woolies surge after ACCC report

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

The numbers

The Australian sharemarket has closed out the week on a high, bucking a negative lead from Wall Street overnight, as supermarket giants – Woolworths and Coles – posted stellar sessions.

The S&P/ASX 200 index rose by 13.2 points, or 0.2 per cent, to 7932.10 points on Friday. Six of the eleven market sectors closed in the green, and the Australian dollar fell below the US63¢ mark to trade at US62.86¢.

Shares in Coles and Woolworths have jumped on Friday after an ACCC report found they were among the most profitable supermarkets in the world. Credit: Asanka Ratnayake

The lifters

The consumer staples sector was the star of the show, buoyed by supermarket giants Woolworths (up 6.3 per cent) and Coles (up 4.9 per cent). Alcohol retailer Endeavour Group also climbed by 2 per cent.

The gains for the supermarkets came after a report by the Australian Competition and Consumer Commission showed that Australia’s supermarket chains are among the most profitable in the world.

The regulator found that without other rivals in the sector, Woolworths, Coles and Aldi would continue to return high profit margins. The report did not find any breach of competition laws.

Nine Entertainment, which owns this masthead, rose by 0.6 per cent, after the media company confirmed it had begun negotiations about the sale of its stake in Domain to CoStar. The US property giant made a $2.7 billion bid for the asset last month, with a spokesperson saying the board would consider the proposal.

The laggards

Miners had a mixed day. South32 dropped 2.5 per cent, Pilbara Minerals also fell, shedding 5 per cent. BHP (up 1.1 per cent) and Rio Tinto (up 0.9 per cent) were also up at close, but Fortescue Metals dipped by 0.9 per cent.

The big four banks were also mixed. Westpac spent most of the trading day in the red, but was 0.4 per cent up at close. NAB (up 0.3 per cent) and ANZ (up 0.5 per cent) also saw a slight lift.

Meanwhile, Commonwealth Bank, the nation’s biggest lender, was down 0.2 per cent at close.

The lowdown

The positive results from the consumer staples sector were the biggest driver of the sharemarket on Friday, said IG Australia market analyst Tony Sycamore.

“The ASX200’s gains today have come courtesy of a rally in the two major supermarket stocks. Their gains followed the release of the competition regulator’s findings, which concluded that Woolworths and Coles should not be forcibly broken up,” Sycamore said.

“The ACCC did, however, provide recommendations around clearer pricing practices, shrinkflation and improved transparency for suppliers.

Wall Street edged lower on Thursday. Credit: AP

“With six trading sessions remaining in March, the ASX200 will need to gain [about] 2.7 per cent to avoid a second consecutive month of losses and, more importantly, its second straight losing quarter,” Sycamore said.

In the US, stock indexes edged lower on Thursday after another reminder that big, unsettling policy changes are underway because of President Donald Trump, along with more signals suggesting the US economy remains solid for now.

The S&P 500 slipped 0.2 per cent after flipping between modest gains and losses through the day. The Dow Jones dipped by 11 points, or less than 0.1 per cent, and the Nasdaq composite fell 0.3 per cent.

Wall Street has been swinging for weeks on a rollercoaster ride, as stock prices veer on uncertainty about what Trump’s trade war will do to the economy. Stocks got a boost after the head of the Federal Reserve said the economy remained solid enough at the moment to leave interest rates on hold.

More data arrived Thursday to bolster that view. One report said slightly fewer US workers filed for unemployment benefits last week than economists expected. It’s the latest sign of a potentially “low fire, low hire” job market.

A separate report said sales of previously occupied homes were stronger last month than economists expected, while a third said manufacturing growth in the mid-Atlantic region appears to be better than economists expected.

But Fed Chair Jerome Powell also stressed on Wednesday that extremely high uncertainty is making it difficult to forecast what will happen next.

It’s not just uncertainty about the trade war affecting Wall Street. Accenture fell to one of the market’s larger losses on Thursday even though the consulting and professional services company reported slightly better profit and revenue for the latest quarter than analysts expected.

Worries are rising about the hit Accenture may take to its revenue from the US government as Elon Musk leads efforts to cut federal spending.

The federal government accounted for 17 per cent of Accenture’s North American revenue last fiscal year, and its stock sank 7.3 per cent.

On Wall Street, Darden Restaurants climbed 5.8 per cent after reporting profit for the latest quarter that matched analysts’ expectations. That was despite what the company behind Olive Garden, Ruth’s Chris Steak House and other restaurant chains called “a challenging environment.”

In stock markets abroad, London’s FTSE 100 fell 0.1 per cent after the Bank of England held its main interest rate steady.

Tweet of the day

Quote of the day

“Whether you’re sinking a beer at the pub, filling your car with fuel, or buying a flashy new set of wheels, a handful of taxes are widening the hole in your hip pocket and helping to bolster a budget that Treasurer Jim Chalmers will hand down on Tuesday. The goods and services tax (GST) applies to most things sold in Australia, but there are items that attract further duties, often in a bid to drive down their consumption.”

That’s Millie Muroi on sin taxes before next week’s federal budget. You can read more of that piece here.

With AP

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