ASX closes at record high as banks and gold stocks rally

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

The numbers

The ASX gained on Monday amid anticipation of a possible interest rate cut from the United States Federal Reserve, and tracking Wall Street’s best week for 2024.

The S&P/ASX 200 rose 21.7 points, or 0.27 per cent, to 8121.6 – its highest-ever closing level – with all but four of the 11 industry sectors increasing.

Wall Street is closing in on new records.Credit: AP

The lifters

The finance sector increased, with Commonwealth Bank (up 1 per cent), Westpac (up 2.2 per cent), NAB (up 1.3 per cent) and ANZ (up 0.2 per cent) all rising.

Gold miners on Monday extended last week’s gains with shares in large-caps Evolution Mining (up 4.2 per cent) and Northern Star Resources (up 1.5 per cent) rising as spot gold rose 0.14 per cent to $US2581.28/oz.

Employment platform Seek gained 1.8 per cent, rounding out the biggest large-cap gainers.

The laggards

On the flipside, the mining sector reversed early gains to finish lower despite the boost from gold, dragged by iron ore prices which dipped 2 per cent to $US92.90 a tonne. Australia’s biggest mining company, BHP, decreased 0.1 per cent, while rivals Rio Tinto and Fortescue fell 0.6 and 1.8 per cent respectively.

Healthcare stocks suffered the worst losses, with large-caps Telix Pharmaceuticals (down 6.5 per cent) and medical imaging provider Pro Medicus (down 3.3 per cent) pulling the sector in to the red.

Meridian Energy dropped 4.6 per cent, rounding out the biggest large-cap losers.

Luxury fashion platform Cettire’s shares plummeted more than 10 per cent after the United States said it would target duty-free thresholds on imports, ostensibly to curb alleged abuse of exemptions by Chinese e-commerce retailers. But the move would also likely cut into Australian-owned Cettire’s bottom line, which has been bolstered by allegedly exploiting duty loopholes. The beleaguered brand’s stocks crashed last month after it announced less than desirable results for the 2024 fiscal year while also facing questions over whether the company had accurately reported its revenue.

The lowdown

Chief commercial officer at Moomoo, Michael McCarthy, said the ASX performed well despite not reaching an intra-day record high.

“We came so close today to that all-time high … We were within 3.7 points,” he said.

“And given the worries that many investors have it’s really quite an extraordinary performance, not just today, but overall, for the market to be performing so well. While there are so many known risks ahead, obviously the key event this week will be the FOMC decision on Wednesday night – Thursday morning, our time. And it appears that there is a lot of optimism around that at the moment, with plenty of strength not just in Australian shares but in shares globally.”

He said for investors, the upcoming Federal Reserve Bank meeting seemed to be a question of not if rates would be cut, but by how much.

“The market pricing of interest rate securities is now leaning harder towards a half per cent cut. So I think for investors, there’s some thought required over the next couple of trading sessions ahead of that decision – we are at all-time highs, if the Fed only cuts by a quarter of a per cent rather than half a per cent, how will markets react? And the fact that we’ve now fallen back from that same level three times, just below 8150, might mean that it’s a short-term resistance for the market, and we could see some consolidation at lower levels before the market, once again, has a crack at those all-time highs.”

On Wall Street on Friday, the S&P 500 rose 0.5 per cent for a fifth straight gain and is just 0.7 per cent below its record set in July. Rallies for Microsoft, Broadcom and other big technology stocks helped it claw back almost all its losses from last week, which was its worst in nearly 18 months.

The Dow Jones jumped 297 points, or 0.7 per cent, and at one point got within 30 points of its record set last month. The Nasdaq composite added 0.7 per cent.

Tweet of the day

Quote of the day

“There’s contention over whether it will be 25 or 50 basis points, and that might be a signal as to how aggressive the Fed wants to be and what they’re thinking about the economy,” Alphinity Investment Management principal Andrew Martin said of what Australian investors will look for in the potential interest rate cut from the United States Federal Reserve Bank.

“It’s not so much that they’re going to, but the message that comes with that cut. The commentary … and how aggressive they want to be, lay of the land, how the economy is panning, how they’re seeing inflation being in control.”

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Consumers have yet to go on a spending spree with their stage 3 tax cut windfalls, with warnings a chase for up to $100 billion in unpaid tax could weigh on shoppers and the overall economy.

Amid signs more people are struggling with higher mortgage repayments, spending data collected by most of the major banks is failing to show any sizeable lift in expenditure associated with the tax cuts that were worth close to $5 billion through July and August.

With AP

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