ASX hits record high as market celebrates US rate cut

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

The numbers

The Australian sharemarket managed to close the week in record-breaking territory, hitting a high of 8246.2 in morning trade after one of the strongest days on Wall Street this year, fuelled by the large cut to US interest rates on Thursday.

The S&P/ASX 200 ultimately closed 17.6 points, or 0.2 per cent, higher at 8209.5, with eight of the 11 industry sectors lifting. The consumer discretionary sector had the strongest gains, while real estate stocks posted the biggest losses.

Wall Street surged a day after the Fed announced a monster rate cut. Credit: AP

The lifters

The consumer discretionary sector performed best on Friday, led by industry giants Wesfarmers (up 1 per cent), JB Hi-Fi (up 1.4 per cent), and Harvey Norman, which shrugged off a fresh class-action consumer lawsuit to gain 1.6 per cent.

Telix Pharmaceuticals gained the most among large-cap stocks, rallying 8.3 per cent after shares slumped earlier in the week. Employment platform Seek rose 4 per cent, followed by Carsales.com’s owner CAR Group, up 3.4 per cent.

Mining giant BHP gained 0.4 per cent, while rival Rio Tinto slid 0.5 per cent. ANZ was the best performing big four bank, with a 1.2 per cent gain.

The laggards

Shares in Myer recovered to close only 1 per cent lower after plunging more than 11 per cent earlier in the session, as the retailer reported that its net profit after tax had dropped to $52.6 million in its latest financial year, down from $71.1 million.

The weakest performers among the large-caps were Pilbara Minerals (down 3.1 per cent), Mineral Resources (down 2.9 per cent) and Computershare (down 2.8 per cent).

The lowdown

Novus Capital senior investment adviser Gary Glover said the second session after a Federal Reserve meeting had historically reflected market sentiment better than the first. “Obviously, that’s a big night [on Wall Street] last night,” he said.

“I’m not surprised to see first night down and second night back up again. So a rate cut should be pretty good for equities, though obviously, there are some parts of the market that are still pretty pricey. Financials are pretty expensive, but there’s definitely pockets there, opportunity there.”

He said Friday had seen a move back into growth shares.

“With the NASDAQ being up last night, I noticed that some of the growth shares were pretty hard today ... 360 [Life360] was up 5 per cent, CAR [Car Group] was up three and a half per cent.”

But he said investors would still be wary of a potential recession.

“We’re looking at economic data really closely from now on to make sure that it doesn’t continue to soften. The rate cuts will take a little while to kick in, but just watching employment numbers and the strength of the economy will be pretty important moving forward here because there are still some concerns there that we might be heading for a recession.”

Overnight, Wall Street romped to records as a delayed jubilation swept markets worldwide following the Federal Reserve’s big cut to interest rates.

The S&P 500 jumped 1.7 per cent for one of its best days of the year and topped its last all-time high set in July. The Dow Jones leaped 522 points, or 1.3 per cent, to beat its own record set on Monday, and the Nasdaq Composite led the market with a 2.5 per cent spurt.

The Australian dollar strengthened as the greenback slumped against major currencies.

Nvidia barrelled 4 per cent higher and was one of the strongest forces lifting the S&P 500. Lower interest rates weaken criticism by a bit that its shares and those of other influential Big Tech companies look too expensive following the frenzy around artificial-intelligence technology.

Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years.

It was a momentous move, closing the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the US economy enough to stamp out high inflation. Now that inflation has come down from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.

Wall Street’s initial reaction to Wednesday’s cut was a yawn, after markets had already run up for months on expectations for coming reductions to rates. Stocks ended up edging lower after swinging a few times.

Tweet of the day

Quote of the day

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With AP

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