The share market closed near its intraday high for the first time this week as Asian markets and US futures firmed ahead of tonight's US inflation report.
The S&P/ASX 200 climbed 32 points or 0.44 per cent to finish above 7300 for the first time ever.
The index has made fresh intraday highs all week, but failed to hold its gains until today. The close at 7302.5 was the strongest on record by about seven points.
A sharp decline in bond yields boosted property stocks, tech firms and other sectors that attract fund flows when fixed income markets offer less attractive returns. Oil companies tracked a decline in crude. The big banks and miners finished mixed.
What moved the market
Aussie stocks firmed as positive signals from Asian markets, US futures and bond markets suggested limited concern about tonight's US consumer inflation report. Wall Street has been in a holding pattern all week ahead of the release. Overnight, the S&P 500 dipped 0.18 per cent and the Dow shed 0.44 per cent.
This afternoon, US futures climbed four points or 0.1 per cent. The Asia Dow rallied 0.36 per cent. China's Shanghai Composite put on 0.44 per cent, Hong Kong's Hang Seng 0.17 per cent and Japan's Nikkei 0.31 per cent.
Bond yields sold off overnight in the US and here today in a move some attributed to short covering in case tonight's data surprises. The yield on ten-year US treasuries sank more than five basis points to below 1.5 per cent. Here, the Australian ten-year yield dived nine basis points to its lowest since February.
“It’s got to be short-covering. I think what we’re experiencing is a rethinking of the narrative at the same time,” George Goncalves, head of US macro strategy at MUFG, told CNBC. “We’re living through the peak of the activity, the peak of the inflation and markets are supposed to be forward looking.”
"The bond market is signalling this is all very transitory," Rhys Williams, chief investment officer of the Opportunistic All Cap Equity Strategy at Spouting Rock Asset Management, told Investing.com. "With the 10-year treasury yield at about 1.50%… clearly the market doesn't seem very nervous about this [inflation] print as much as maybe individual portfolio managers are."
ANZ today joined the growing number of economists predicting the Reserve Bank will have to raise rates sooner than current guidance. ANZ's research team now expects the cash rate to rise to 0.5 per cent in two steps by the end of 2023 as inflation settles within the RBA's 2 -3 per cent target range. The RBA's current stance is it does not anticipate raising the cash rate from a record low 0.1 per cent until 2024 at the earliest.
Real estate investment trusts compete with bond markets for investment flows and have been one of the main beneficiaries of the decline in yields. The sector climbed 2.44 per cent this afternoon to its highest level of the pandemic era.
SCA Property Group rallied 3.6 per cent, Charter Hall 3.56 per cent and Stockland 3.18 per cent. Goodman Group, the biggest of them all, rose 2.27 per cent to its highest since 2008.
The tech sector was the session's other big mover, rising 2.03 per cent. EML Payments gained 3.7 per cent, Xero 2.96 per cent, WiseTech 2.68 per cent and Appen 2.26 per cent.
Woolworths bounced 0.77 per cent after the competition regulator, the ACCC, said it would not oppose the supermarket chain's proposed investment in PFD Food Services. Woolworths will now acquire a 65 per cent equity interest in the family-owned food distributor.
Iress surged 16.8 per cent to a pandemic-era high despite dousing media speculation an outside investor was building a stake in the finance software maker. The company said it had not received any direct approach.
PointsBet rose 0.22 per cent after inking a deal to provide online and retail sports wagering in Maryland.
Energy stocks declined with oil. Brent crude retreated 57 cents or 0.79 per cent this afternoon to US$71.65 a barrel. Oil Search fell 3.33 per cent, Woodside 1.47 per cent and Santos 0.91 per cent.
The major miners improved as the session wore on. BHP trimmed its fall to 0.76 per cent. Rio Tinto advanced 0.1 per cent and Fortescue Metals 0.79 per cent.
Building supplies firm Boral eased 0.73 per cent after recommending shareholders reject an offer from major stakeholder Seven Group for the shares Seven does not already hold. Chair Kathryn Fagg said the offer "materially undervalues" Boral. Shares in Seven Group rose 0.52 per cent.
Austal's run of positive announcements ended with news the Australian Securities and Investments Commission had commenced civil penalty proceedings against the shipbuilder. ASIC alleges Austal failed its continuous disclosure obligations by waiting a month in 2016 to tell investors of a material write-back of work in progress. The share price dropped 2.16 per cent. The company announced two contract wins in the US this week.
ANZ dipped 0.14 per cent during a mixed session for the banks. CBA gained 0.76 per cent, NAB 0.23 per cent and Westpac 0.15 per cent.
Gold faded $9.40 or 0.5 per cent this afternoon to US$1,886.10 an ounce.
The dollar rose 0.07 per cent to 77.35 US cents.