ASX stumbles higher after Wall Street’s Trump rally, Sigma soars

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

The numbers

The Australian sharemarket finished in the green on Thursday after opening lower in a lacklustre session that contrasted with Wall Street’s rally overnight as local investors weigh up the implications of Donald Trump’s US election win for Australia’s companies.

Trump’s win sent Wall Street surging.Credit: AP

The S&P/ASX 200 Index edged up 26.8 points, or 0.33 per cent, to 8226.3 points, with five of the 11 industry sectors in the red.

Energy stocks soared more than 2 per cent and the IT and industrial sectors were strong on the day after the landslide election while the real estate sector slumped amid rising bond yields.

The local election hangover was far from the exuberance pushing Wall Street’s main indexes to record highs after Trump’s remarkable comeback to the White House as president-elect.

The lifters

Energy stocks were the biggest winners of the day, tracking their counterparts in the US on optimism the shift of power in the White House is going to boost their profits.

“Drill, baby, drill!” president-elect Donald Trump is expected to abandon the Biden administration’s push away from fossil fuels to clean energy, and to scrap curbs on drilling in the Atlantic. Woodside shares gained 3.2 per cent and Santos climbed 2.4 per cent.

Sigma Healthcare’s stock rocketed 25 per cent after the competition watchdog gave its blessing to the company’s planned merger with Chemist Warehouse to form an $8.8 billion titan that would own 16 per cent, or 700, of Australian pharmacies.

ACCC chair Gina Cass-Gottlieb said the watchdog had formed the view that the deal would not reduce competition on any level of the supply chain.

The mining giants were largely holding down the fort despite wider sector losses. Fortescue, Rio Tinto and BHP rose 3.2 per cent, 1.9 per cent and 0.9 per cent respectively amid hopes for fresh stimulus measures in China that could boost demand for iron ore and news that China’s imports of iron ore rose 4.9 per cent last month.

National Australia Bank recovered from early losses and closed up 0.2 per cent after the lender said profits in the past financial year fell 8.1 per cent to $7.1 billion as intense competition in the mortgage market squeezed profits. The result was largely in line with analyst expectations.

Media group Nine Entertainment, owner of this masthead, dropped 2.1 per cent at lunchtime, but swung into the green to close 0.9 per cent higher after acting chief executive Matt Stanton flagged another $50 million in cost cuts over coming months.

Shareholders vented their anger at management at Nine’s annual general meeting, with more than a third voting against executive pay and 17 per cent against the re-election of new chair Catherine West.

The laggards

Real estate investment trusts led declines after bond yields jumped overnight as investors assessed the chances of Trump’s policies raising government debts, boosting inflation and dampening the global rate-cut outlook. Warehouse owner Goodman Group fell 2.4 per cent, shopping centre owners Scentre and GPT lost 1.1 per cent and 4.3 per cent, and developer Mirvac dropped 1.4 per cent.

Giving evidence to a Senate hearing in Canberra, Reserve Bank assistant governor Christopher Kent said Trump’s policies such as tax cuts would probably mean higher US long-term interest rates and inflation, which would flow through to the global economy.

The lowdown

“Our market had a head-start on Wall Street, so today is a bit of a pullback on that,” BetaShares chief economist David Bassanese said. “Today’s performance, plus yesterday’s performance, is still less than what we’re seeing from Wall Street, which suggests the Trump victory is good news for stocks, but particularly good news for US stocks.”

Bassanese says Australian companies with greater exposure to the US economy will fare better than those who don’t.

“Those with more exposure to China potentially benefit less,” the economist said. “Beyond the interest rate and impact on real estate investment trusts is the different geographic implications – companies doing more business in the US will benefit more.”

In a sign of this trend, there was a 4.8 per cent rise in the shares of QBE – which has a sizeable US business – and a 5.5 per cent rise in shares of BlueScope Steel, which also has operations in the US.

Trump’s shock sweep of the election set off fireworks on the US sharemarket overnight as Wall Street is anticipating lower taxes, deregulation and a president quick to sound off on everything from the stock market to the US dollar, even though tariff hikes could bring higher deficits and inflation.

The S&P 500 rose 2.5 per cent, the Dow Jones surged 3.6 per while the Nasdaq jumped by 3 per cent.

The Republican’s win powered a rally in Trump trades as US Treasury yields surged and the US dollar gained. The Australian dollar lost 1 per cent overnight but pared some of its losses and was fetching 66.21 US cents at around 5pm AEDT.

Trump has pledged to make the country “the crypto capital of the planet” and create a “strategic reserve” of Bitcoin. The price of Bitcoin hit an all-time high, but was easing back slightly to $US74,622 by the end of the day.

Tweet of the day

Quote of the day

“It’s been a hell of a ride, from a young bloke wanting to call the races to being the old bloke sitting in this studio for so long. But the time has come for someone else to do the job,” said Ray Hadley as he announced his shock resignation from Nine Network’s 2GB.

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There was one sobering note amid the near-euphoria in financial markets that erupted when it became clear that Donald Trump had regained the US presidency – US bond yields shot up, writes Stephen Bartholomeusz.

Reuters, AP

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