Share market records: buoyant US drives ASX stocks to new highs

JB Hi-Fi, the Commonwealth Bank and Wesfarmers are among several stocks to reach fresh records this month. See the list.

JB Hi-Fi is among the stocks to reach record high in July. Picture: NCA NewsWire

More than a dozen of Australia’s 100 biggest companies have broken share price records this month, dragged higher by a surging US stockmarket.

The fresh peaks on the S&P/ASX 100 index are spread broadly across sectors – from healthcare and technology to real estate and retail – as markets pin their hopes on good news for the global economy and interest rates.

Commonwealth Bank, Wesfarmers, JB Hi-Fi, Ampol, ­Cochlear and REA Group are among the big names to hit new highs in July.

Baker Young managed portfolio analyst Toby Grimm said the rush of records by Australian stocks was part of “a broader market move, based on hopes there is an earnings upgrade cycle (that will) materialise in 2025”.

Commonwealth Bank shares have had a good year. Picture: NCA NewsWire/Damian Shaw

Moderating global inflation, the belief that a global recession had been averted, and the start of central bank interest rate cuts had helped fuel confidence in markets, Mr Grimm said.

“We are going to get to rate cuts before we hit a global recession, so earnings risks are probably not going to eventuate,” he said.

Mr Grimm said in the US there had been talk of “a renaissance in earnings, with double-digit earnings growth across the market for the next one or two years”.

Some of that optimism has stalled after the share prices of US technology giants fell sharply, some by more than 10 per cent.

Australian tech stocks that hit record highs in July – Nextdc and REA – had slipped back, down 11 per cent and 4.4 per cent respectively, but Technology One continued to climb, reaching new high of $19.52 on Friday.

Shaw and Partners senior investment adviser Jed Richards said a global tech stock selldown was “something we are looking forward to”.

“A lot of those stocks still have growth ahead and are excellent opportunities for five to 10 years, but they’re also expensive,” he said.

“We will be buying more of the Nvidias, Amazons and Googles in the event we get more of a pullback.”

Mr Richards said even though the Australian market was generally lacking in large technology stocks, it had been dragged higher by the strong performance of the US market. He said investors were now in a “holding pattern” as ­reporting seasons in the US, Europe and soon Australia played out.

“Looking at the reporting seasons right across the world, so far so good – this was surprising because the expectations had been really high,” he said.

Mr Richards said companies that missed expectations would be punished, and his overall outlook for the market was “sideways”.

“We have got some value there, but there are a lot of things that are top-heavy,” he said.

In recent months many analysts have put CBA in that category but it continued to fire, reaching a record $134.25 this month.

Mr Grimm said earnings optimism was driving big companies such as CBA higher.

“The Australian banks have had a couple of years of anaemic earnings growth, and we have seen the market wipe the sweat from its brow and say ‘we are not going to get that nasty recession with delinquent loans and defaults’,” he said.

JB Hi-Fi and Wesfarmers ­enjoyed record highs despite ­discretionary retail stocks battling negative consumer sentiment, amid a “flocking to the biggest companies”, Mr Grimm said.

“JB Hi-FI is a structural ­thematic with AI – as Apple and Dell integrate AI chips in their hardware consumers are going to need to buy new hardware,” he said.

Mr Grimm has a favourable outlook for stocks.

“In the reporting seasons some skeletons in closets will be exposed, but I’m pretty optimistic about the next 12 to 18 months,” he said.

“Our performance compared with the US has been lacklustre. Will we catch up? Probably not, but we certainly have some room to outperform.”

Originally published as Share market records: buoyant US drives ASX stocks to new highs