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The share market inched to a new eight-and-a-half-month high as a strong start to the year continued.
The S&P/ASX 200 rose seven points or 0.1 per cent to 7393.4. Buying in the closing auction helped avert the first back-to-back losses of 2023 following a two-point drop yesterday.
Today’s gain extended the Australian benchmark’s advance since January 1 to 5 per cent.
Gains today in tech, healthcare and consumer stocks narrowly outweighed declines in resource and property stocks and utilities.
What moved the market
The ferocious rally since the start of the year has slowed this week as investors wait to assess the impact of higher rates and consumer prices on corporate profits. The Dow lost 1.14 per cent overnight and the S&P 500 index 0.2 per cent as a big earnings miss from Goldman Sachs weighed.
The Nasdaq eked out a seventh straight advance, rising 0.14 per cent as traders continued to favour growth over value. On the ASX, tech was today’s best-performing sector as buyers continued to sift for companies oversold during last year’s fire storm on financial markets.
Stocks have started 2023 on the upswing amid expectations that inflation is cooling fast enough to avert the most bearish predictions for interest rates. That theory faces another test tonight with December producer price data in the US.
“November’s lower producer index growth went on to make consumer prices lighter in the following month, and if the index shows a fall under 7% in December on a yearly basis, the Fed could have another reason to hit the pause button on rate hikes sooner than expected,” Kunal Sawhney, chief executive of research group Kalkine, said.
December retail sales data tonight will likely underscore the effect of higher rates and inflation on spending.
“Retail data is expected to show recovery on a month-on-month basis, but whether Americans spent as much money in the 2022 December festive season as in 2021 would be an indicator of how inflation has, of late, impacted demand,” Sawhney said.
UBS today raised its end-of-year target for the ASX 200, citing resilient domestic consumption, China’s rapid reopening and improvements in Europe. The bank lifted its forecast from 7250 to 7500. The index was this afternoon trading just below 7400.
The Bank of Japan surprised markets this afternoon by maintaining its ultra-low interest rates in the face of inflationary pressures. The bank has been defending its 0.5 per cent cap on the ten-year bond yield against attacks by bond vigilantes betting the bank’s yield curve control is unsustainable. The yen slumped against the greenback and Australian dollar in the wake of today’s decision.
Winners’ circle
Qantas touched a near three-year high before trimming its rise after a flight from New Zealand to Sydney issued a ‘Mayday’ call. The pilot reported an engine had failed. The share price traded as high as $6.69 before pulling back to $6.57, a gain of 0.46 per cent.
The tech sector led as Afterpay owner Block firmed 4.57 per cent, Xero 2.49 per cent and Technology One 2.48 per cent.
The healthcare sector logged a sixth straight advance. Fisher & Paykel Healthcare put on 2.85 per cent, ResMed 2.32 per cent, Ansell 1.59 per cent and CSL 0.78 per cent.
Telix Pharmaceuticals popped 8.6 per cent after turning cash flow positive last quarter for the first time. The company swung from cash outflow of $5.3 million in Q1 to a maiden inflow of $1.6 million last quarter. Cash receipts jumped 62 per cent to $72.2 million. Sales revenues in the US surged 43 per cent.
JB Hi-Fi climbed 3.16 per cent towards an eight-month high on the back of yesterday’s record half-year result. Other retailers to advance included Harvey Norman +2.51 per cent, Premier Investments +1.52 per cent and Wesfarmers +0.79 per cent.
Nickel Industries entered a trading halt to tap investors for funds to acquire interests in two producing nickel assets. The company has entered agreements with Shanghai Decent Investment Group to acquire a 10 per cent interest in the PT Huayue Nickel Cobalt Company and an additional 10 per cent interest in the Oracle nickel project.
The $673 million capital raise will also fund the acquisition of “options to collaborate with Shanghai Decent on future battery nickel opportunities”.
Doghouse
Gold miner Newcrest shed 1.8 per cent as the yellow metal fell for a second day. Gold Road Resources gave up 4.56 per cent, Capricorn Metals 4.53 per cent and West African Resources 2.7 per cent.
BHP continued to back off record levels following a two-day decline in the price of iron ore. The Big Australian dropped 0.12 per cent.
Industrial property heavyweight Goodman Group lost 1.75 per cent, Woodside Energy 0.99 per cent and James Hardie 0.7 per cent.
Record December quarter production failed to impress investors in lithium miner Allkem. Output at the miner’s Olaroz facility increased by 17 per cent over the prior corresponding period to a record 4,253 tonnes. Revenues were US$151 million with a gross cash margin of 90 per cent. The share price eased 0.33 per cent.
Online creators’ marketplace Redbubble slumped 11.4 per cent after announcing job cuts and other cost savings with consumer demand expected to remain “challenging” in the year ahead. The company will cut 14 per cent of its workforce as it focuses on returning to cash flow positive by year-end.
The departure of chief financial officer Robert Shore “by agreement” helped pull EML Payments down 2.9 per cent. Shore had been in the role for six and a half years. The firm’s European CFO, Jonathan Gatt, will act up until a permanent replacement is appointed.
Other markets
A downbeat session on Asian markets saw China’s Shanghai Composite off 0.02 per cent, Hong Kong’s Hang Seng down 0.13 per cent and the Asia Dow lose 0.29 per cent. Japan’s export-focussed Nikkei 225 index jumped 2.45 per cent as the yen plunged against the greenback.
US futures overcame early weakness. S&P 500 futures firmed five points or 0.12 per cent.
Oil rose for the sixth time in seven sessions. Brent crude climbed 72 US cents or 0.84 per cent to US$86.64 a barrel.
Gold fell for a second day. The yellow metal declined US$8.90 or 0.47 per cent to US$1,901 an ounce.
The dollar firmed 0.1 per cent to 69.94 US cents.
