Miners, banks lift ASX after Wall Street rises; Santos surges

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

The numbers

Shares in mining, bank and real estate companies rallied on Thursday, lifting the Australian shares benchmark to a significant gain. The move followed Wall Street’s record-breaking rally overnight.

The S&P/ASX 200 Index roses 91.9 points, or 1.2 per cent, to 7831.8, with every sector bar utilities trading in the green. The Australian dollar was slightly weaker, fetching US67.14¢.

Sharemarket trading ended early in the US ahead of the July 4 public holiday. Credit: Bloomberg

The lifters

Santos shares rose 4.2 per cent to be one of the biggest large-cap advancers following reports that at least two Middle Eastern energy giants could bid for the oil and gas giant. The moved helped pull the energy sector 1.5 per cent higher. Competitor and index heavyweight Woodside also gained 0.6 per cent and Ampol gained 1.1 per cent.

Bellevue Gold finished as one of the day’s best performers with a 6.5 per cent gain, followed by Magellan Financial Group (up 6.1 per cent) and Arcadium Lithium (up 5.5 per cent).

The mining sector surged 2.3 per cent, with gold miners Newmont (up 3.2 per cent) and Evolution (up 4.1 per cent) climbing on the back of a 1.5 per cent increase in gold prices overnight. Iron ore heavyweights BHP (up 2.6 per cent) and Fortescue (up 3.2 per cent) also helped to bolster the sector.

The laggards

Utilities (down 1.1 per cent) was the weakest sector, with AGL shares down 1.4 per cent and Meridian 1.7 per cent. Pro Medicus (down 5.1 per cent) was the biggest large-cap decliner.

The lowdown

In a report about the economy, Citi Research mused that stronger-than-expected inflation data has made it harder for the Reserve Bank to maintain the current cash rate.

“We pencil a 25 [basis-point] increase in the cash rate in August to 4.6 per cent. Not raising rates risks policy credibility and would signal a dilution in importance of inflation, which would be unheralded,” said Citi Research head of economics Josh Williamson in a research note to clients.

Morgan Stanley is also forecasting a rate hike in August, but its equity strategists acknowledged that this was not a consensus view after conversations with investors.

“While the RBA has shown a clear preference to not accelerate the downward path of inflation with tighter policy, the stalling of progress over 2024 is much more consequential and is likely to raise concerns around broader inflation expectations,” wrote Morgan Stanley researchers.

Overseas, Wall Street’s record-breaking rally kept going after weak reports on the US economy kept the door open for possible cuts to interest rates.

The S&P 500 Index rose 0.5 per cent to set a record high for a second straight day and for the 33rd time this year. The Dow Jones Industrial Average slipped 0.1 per cent, while the Nasdaq Composite Index added 0.9 per cent to eclipse the record set a day earlier. Trading ended early for the day ahead of the July 4 public holiday.

Tesla again helped boost the market and rose 6.5 per cent a day after reporting a milder drop in sales for the spring than analysts feared. It was one of the strongest forces pushing the S&P 500 up, along with Nvidia. The darling of Wall Street’s rush into artificial-intelligence technology climbed 4.6 per cent to bring the chip company’s gain for the year so far to 159 per cent.

The action was stronger in the bond market, where Treasury yields slid following a flurry of reports that came in weaker than expected on both the jobs market and US services companies. The data could keep the Federal Reserve on course to deliver the cuts to interest rates later this year that Wall Street desires.

One report said activity for businesses in the real estate, retail trade and other US services industries contracted in June for just the third time in 49 months. The reading was weaker than economists’ forecasts, which called for just a slowing of growth. Perhaps more importantly for Wall Street, the report from the Institute Supply Management also said prices were increasing at a slower pace.

That followed reports from earlier in the morning showing a slowing jobs market. One said slightly more US workers applied for unemployment benefits last week than economists expected, though the number remains low compared with history.

Tweet of the day

Quote of the day

“Lots of potential acquirers start to consider Santos, but once they look under the surface at Santos they see too many problems at the legacy onshore Australian assets and walk away.” That’s MST Marquee energy analyst Saul Kavonic on Santos amid speculation that the oil and gas producer is in talks with one or more potential suitors looking to acquire the company.

With AP

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