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The share market sealed its longest winning run in six weeks with a fourth advance after a bounce in oil and metals boosted resource stocks.
The S&P/ASX 200 climbed 34 points or 0.5 per cent to its strongest close since mid-September.
Gold and copper miners outperformed. Energy producers also rallied as Brent crude tested a two-week high. Bank stocks dragged after ANZ warned of tougher times ahead as the cost of living rises.
What moved the market
The ASX sustained its winning run amid signs central banks are starting to slow this year’s series of aggressive rate hikes. Overnight, the Bank of Canada surprised the market by raising its benchmark rate a smaller-than-expected 50 basis points.
CMC’s chief market analyst, Michael Hewson said the move “suggests that central banks are starting to wake up to the possibility that too aggressive rate rises could do more harm than good.
“It’s also got markets asking the question, could the Fed follow suit next week after another poor set of housing numbers from the US,” he added.
The prospect of a Fed “pivot” helped the Dow eke out a fourth straight rise, albeit a slender 0.01 per cent. The S&P 500 and Nasdaq declined 0.74 and 2.04 per cent, respectively, following weak trading updates from Microsoft and Alphabet (Google).
The heavily-weighted mining sector did much of the heavy lifting on the ASX after a retreat in the US dollar lifted oil and metals. A weaker greenback makes dollar-denominated commodities cheaper for buyers using other currencies.
Overnight gains included 3.3 per cent for copper, 5.2 per cent for aluminium, 0.7 per cent for gold and 2.3 per cent for Brent crude. The rally came after China intervened in currency markets to protect the yuan. The Chinese currency slumped to a 15-year low this week amid questions about economic growth under a Xi Jinping presidency.
Today’s rally defied growing expectations the Reserve Bank may lift benchmark interest rates by half a percentage point next week. Westpac’s influential chief economist Bill Evans said yesterday’s red-hot inflation report may force the bank’s hand.
“The September quarter inflation report has come as such a major surprise that we think the Reserve Bank Board will decide to raise the cash rate by 50bps at the next Board meeting on November 1,” Evans said.
The RBA has repeatedly said the size and timing of rate hikes will be determined by incoming data, including the outlook for inflation. Core inflation jumped to a record 6.1 per cent year-on-year last quarter, according to yesterday’s ABS report.
Winners’ circle
Resource stocks led following strong gains in metals. Gold miners filled the top four slots on the index. Ramelius put on 8.4 per cent, Sandfire 7 per cent, Regis Resources 6.85 per cent and St Barbara 6 12 per cent.
Newcrest popped 3.22 per cent to a two-month high on the prospect of improved gold and copper production this quarter following planned maintenance shutdowns. Gold production declined 17 per cent last quarter. The miner said it remained on track to meet full-year guidance as production recovers.
Lynas Rare Earths climbed 5.57 per cent as news of progress on projects in Australia and the US helped offset operational challenges in Malaysia due to a water supply failure. Production and sales both declined last quarter.
Other miners to post gains included Nickel Industries +5.63 per cent, South32 +3.02 per cent and Champion Iron +4.8 per cent.
A post-pandemic rebound in sales boosted JB Hi-Fi 0.4 per cent. The retailer’s Australian sales increased 14.6 per cent last quarter from Q1 FY22. New Zealand sales surged 27.7 per cent.
Automotive and outdoor sports group Super Retail also reported strong sales growth. The retailer’s shares rallied 2.67 per cent on news group sales expanded 20 per cent over the first 16 weeks of this fiscal year from the same period in FY22.
Shopping mall owner Unibail-Rodamco-Westfield gained 0.27 per cent after raising its full-year guidance as tenant sales improved. Qube added 0.39 per cent after reaffirming full-year guidance.
Doghouse
ANZ slumped 3.29 per cent as a 5 per cent increase in full-year cash profit was overshadowed by a cautious outlook from CEO Shayne Elliott.
“Cost-of-living pressures are starting to have a meaningful impact and the next six months will be testing,” Elliott said.
“This is particularly an issue for first-time homeowners who are only starting to build up their equity as well as those with less stable employment. This is why we have kept in place the additional hardship resources we invested in during the pandemic in Australia.”
The bank reported a cash profit of $6.515 billion. Shareholders will receive a final dividend of 74 cents per share.
Bank of Queensland shed 4.81 per cent as its shares traded without the right to the latest dividend. Westpac fell 1 per cent. NAB gave up 0.53 per cent. CBA swung to a gain of 0.41 per cent.
A record first quarter of iron ore shipments was not enough to lift Fortescue Metals following news of a 16 per cent increase in costs. Shipments increased 4 per cent over the prior corresponding period. The miner maintained its full-year shipping, costs and capital expenditure guidance. The share price eased 0.37 per cent as iron ore declined in China.
Core Lithium dropped 5.15 per cent after an offtake agreement with Tesla fell through. The firm said a deadline for concluding a term sheet passed without the two sides reaching agreement.
Australian Clinical Labs sank 5.37 per cent after outing itself as the latest victim of a cyber security attack. The firm said Medlab Pathology, acquired late last year, had experienced a “notifiable cyber incident involving personal information of some of Medlab’s patients and staff”.
Drilling services provider AJ Lucas plunged 46.38 per cent after the UK’s new Prime Minister announced he would reimpose a ban on shale gas fracking. Rishi Sunak said he would restore a moratorium briefly lifted by his predecessor, Liz Truss.
A post-lockdown dip in sales knocked online beauty products retailer Adore down 5.17 per cent. The firm reported $45.4 million in Q1 revenue, a drop of 29 per cent from the same period last year.
Other markets
A rebound in Hong Kong stocks continued after a recovery in the yuan. The Hang Seng index gained 1.74 per cent. The Shanghai Composite faded 0.07 per cent. The Asia Dow added 0.99 per cent. Japan’s Nikkei eased 0.19 per cent.
US futures shrugged off an 18 per cent after-market plunge in Facebook owner Meta Platforms following a poorly-received trading update. S&P 500 futures rose 22 points or 0.56 per cent.
Oil added to last night’s 2.3 per cent rally. Brent crude climbed 21 US cents or 0.2 per cent to US$95.90 a barrel.
Gold was broadly steady near a three-week high. The yellow metal eased 20 US cents or 0.01 per cent to US$1,669 an ounce.
The Australian dollar regained 65 US cents after surging more than 1.5 per cent overnight. The Aussie firmed another 0.27 per cent this afternoon to 65.13 US cents, a three-week high.
