Miners’ rally not enough to offset falling banks on ASX; Premier slumps

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

The numbers

The Australian sharemarket had a mixed session on Wednesday, oscillating between gains and losses as investors switched out of banks and piled into the big miners for a second day following a slew of stimulus measures by the Chinese central bank to prop up the world’s second-largest economy.

The S&P/ASX 200 finished down 15.6 points, or 0.2 per cent, at 8126.40, with materials stocks rallying 2.5 per cent higher, while financial stocks’ 1.7 per cent decline weighed on the bourse.

Wall Street rose to fresh record highs overnight, but that didn’t extend to the Australian sharemarket.Credit: AP

The lifters

Iron ore giant Fortescue (up 4.7 per cent), BHP (up 3.4 per cent) and Rio Tinto (up 3.6 per cent) were having a second straight day of bumper gains after Tuesday’s announcement out of China. Iron ore prices jumped more than 6 per cent on the China stimulus.

Shares of supermarket giants Woolworths and Coles rose 0.6 per cent and 0.4 per cent, respectively, rebounding after investors sold off the stocks over the past couple of sessions as they assessed the potential impact of the competition watchdog’s Monday announcement it was suing the supermarket giants for “misleading” consumers.

The laggards

The big four banks were again trading lower as investors rotated into the miners, with the biggest stock on the local bourse, CBA, down 2.3 per cent, while NAB lost 2.7 per cent, ANZ shed 1.1 per cent and Westpac was down 0.8 per cent.

Meanwhile, rag trade billionaire Solomon Lew’s fashion retailer Premier Investments was at the bottom of the index with losses of 9.8 per cent after delaying plans for a proposed demerger of its Smiggle and Peter Alexander brands as it focuses on selling some of its other brands to Myer.

KMD Brands shares were down 1.1 per cent after the operator of Kathmandu, Rip Curl and Oboz said all three brands suffered a significant decline in sales during the 2024 financial year.

The lowdown

While the big monetary stimulus push in China was continuing to dominate trades, prompting investors to switch back into the mining heavyweights in the hope of rising demand for Australia’s metals, market attention was also on the monthly inflation figures released late in the morning.

The Australian Bureau of Statistics monthly measure of inflation for August fell to an annual rate of 2.7 per cent, its lowest level in almost three years, with positive signs for the Reserve Bank and consumers. In August alone, prices edged down while they have not increased since June.

And in news especially relevant for the Reserve Bank in its interest rate decisions, the annual rate of underlying inflation eased from 3.8 per cent to 3.4 per cent. RBA governor Michele Bullock on Tuesday said the bank would focus on that measure of inflation as the headline rate was affected by government subsidies, which have helped push down electricity prices.

However, investors weren’t getting carried away by the positive news, despite cautious optimism.

“Today’s data is unlikely to impact the RBA’s stance because their main focus is on underlying inflation rather than the noisy headline,” AMP analyst My Bui wrote in a note to clients.

“The cash rate is going to remain unchanged for now given above-target inflation readings and a still benign labour market, but two more mild quarterly inflation readings – coupled with still stagnant consumer spending – should prove enough for the RBA to pivot towards a more dovish stance” early next year, he said.

In Wall Street overnight, market indexes lifted to record highs, with stocks exposed to China soaring.

The S&P 500 rose 0.3 per cent to set an all-time high for the 41st time this year. The movements were tentative, though, and the index wavered up and down following a surprisingly weak report released in the morning on confidence among US consumers. The Dow Jones added 83 points, or 0.2 per cent, to its own record set the day before, while the Nasdaq composite gained 0.6 per cent.

Financial markets have been mostly ebullient after the Federal Reserve made a drastic turn last week in how it sets interest rates. It’s now lowering rates to make things easier for the US economy after keeping them high for years in hopes of extinguishing high inflation.

One of the risks that’s still hanging over the market is the struggling Chinese economy and how much its flagging growth may affect the rest of the world. After earlier delivering some modest and piecemeal moves, the chief of China’s central bank announced more measures, including lower interest rates and a reduction in the amount of reserves banks are required to keep.

Analysts called the co-ordinated moves encouraging, and they helped stocks soar in China. Indexes jumped 4.2 per cent in Shanghai and 4.1 per cent in Hong Kong. But questions still remain about how much they will boost the economy, which has been struggling since Chinese authorities cracked down on excessive borrowing by property developers.

Quote of the day

“We can’t just be known as a puffer jacket company, we need to expand into new categories,” said KMD Brands chief executive Michael Daly, after revealing Kathmandu sales were down 14.5 per cent during the 2024 financial year as shoppers stayed away from the outdoor and lifestyle retailer amid cost of living pressures.

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Research conducted by farmer-owned dairy co-operative Norco found four in five shoppers (81 per cent) actively bought products from an overseas company, believing it was Australian-owned.

With AP

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