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The ASX 200 cracked 7000 for the first time in seven weeks as a rebound in commodity prices helped offset caution on Wall Street ahead of an interest rate decision.
The Australian benchmark traded as high as 7012 before trimming its rise to 20 points or 0.29 per cent at 6997.
Energy producers and miners led the advance. Woodside climbed to a four-year high. Overall index gains were kept in check by declines in property and tech stocks.
What’s driving the market
The ASX marched towards its seventh rise in eight sessions after the first of this week’s central bank rates decisions added to optimism the current rates cycle is slowing. The Reserve Bank yesterday ignored calls for a 50 basis point hike, instead opting for a market-friendly 25 bp increase.
The share market responded by catapulting the ASX 200 up 1.65 per cent. The rally continued this morning as the ASX’s more benign rates outlook encouraged traders to ignore a second straight fall on Wall Street.
“The RBA is guiding other central banks, including the most influential Fed, who are confused over how to proceed. With yesterday’s 25 bps hike, the RBA has reassured the market that its October move was no one-off or random,” Kunal Sawhney, CEO of research group Kalkine, said.
“The ASX 200 is now closing the gap between where it stood at the beginning of this uncertain and tumultuous year to where it might close by year-end. Over the coming weeks, domestic equities can get support from the so-called Santa Claus rally, which is historically proven,” he added.
This morning’s economic data underscored the impact of this year’s run of rate hikes. Building approvals slumped 5.8 per cent in September. The Australian Industry Group’s manufacturing PMI fell into contractionary territory, dropping 0.6 points to 49.6.
The S&P 500 retreated 0.41 per cent overnight as a two-day Federal Reserve meeting got underway.
The bank is widely expected to announce another 75 bp rate hike in the early hours of tomorrow, Australian time. The real interest in tonight’s meeting lies in whether the Fed signals it is ready to take its foot off the accelerator after what is likely to be four straight increases of 75 bp.
Going up
Resource stocks set the pace following recoveries in iron ore, metals and crude. BHP put on 2.58 per cent, South32 2.15 per cent and OZ Minerals 2.59 per cent.
Rio Tinto firmed 2.19 per cent after securing additional support for its pursuit of Canada’s Turquoise Hill Resources. The company said it had secured the votes of funds and entities associated with several shareholders. The miner also said its offer of C$43 per share was best and final.
Lithium developer Lake Resources was the morning’s second-best performer, surging 8.96 per cent after a demonstration plant in Argentina achieved 80 per cent lithium recoveries. Plant optimisation work was underway, with first samples expected to ship within two weeks.
Coal miner Coronado jumped 9.33 per cent in the wake of Monday’s trading update. Karoon Energy put on 4.79 per cent, Sandfire Resources 4.83 per cent and Ramelius 3.87 per cent.
Vulcan Energy inched up 0.13 per cent after expanding its footprint into France. The miner is targeting the French side of the Rhine Valley following positive sampling results. The company has established a French subsidiary and applied for an exploration licence.
Energy stocks lifted following reports Iran planned to attack Saudi energy infrastructure. Brent crude climbed 2 per cent overnight and another 21 US cents or 0.2 per cent this morning to US$94.86 a barrel.
Woodside rallied 2.17 per cent to a four-year high. Beach Energy tacked on 2.14 per cent. Santos gained 1.59 per cent.
Going down
The real estate investment trust sector’s seven-session winning run came under threat with a fall of 1.6 per cent. Sector heavyweight Goodman Group dropped 2.75 per cent despite reporting a 99 per cent occupancy rate and 4 per cent growth in net property income through the first quarter. The firm said it remained “cautious and patient given market volatility, geopolitical risks and a slowing economy”.
Elsewhere in the sector, Stockland dropped 2.49 per cent, Centuria Capital 1.86 per cent and Cromwell Property Group 2.07 per cent.
CSL retreated 0.28 per cent after striking a deal for exclusive access to US respiratory vaccine specialist Arcturus Therapeutics’ next-generation mRNA technology. CSL will pay US$200 million to license Arcturus’s tech for Covid and flu vaccines.
“This collaboration is an exciting opportunity to complement CSL’s own next generation mRNA program with a partner who developed a platform to deliver late stage clinical supplies at scale,” CSL Chief Operating Officer Paul McKenzie said.
Packager Amcor declined 4.07 per cent after lowering its adjusted earnings outlook to reflect strength in the US dollar. The company reaffirmed its full-year guidance, but lowered its expectations for adjusted earnings per share on a reported basis to 77-81 US cents from previous guidance of 80-84 US cents.
The tech sector trimmed a two-session advance. Xero shed 2.91 per cent, Megaport 1.55 per cent and Block 1.01 per cent.
Other markets
Asian markets mostly retreated ahead of tonight’s Fed rates verdict. China’s Shanghai Composite declined 0.29 per cent, Hong Kong’s Hang Seng 0.43 per cent and Japan’s Nikkei 0.12 per cent. The Asia Dow gained 0.37 per cent.
US futures nudged higher. S&P 500 futures were recently ahead eight points or 0.21 per cent.
Gold added to last night’s 0.6 per cent rally, rising US$2.80 or 0.17 per cent to US$1,652.50 an ounce.
The dollar was broadly steady at 63.97 US cents.
