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A third day of gains carried the ASX 200 to its highest level since late May after Wall Street rallied on the prospect of a slowdown in interest rate hikes.
The S&P/ASX 200 climbed 22 points or 0.3 per cent to 7253 by mid-session.
Tech stocks and gold miners led following declines in the US dollar and treasury yields. Energy was the only significant drag following a sharp drop in crude overnight.
What’s driving the market
The outlook for interest rates continued to set the tone on financial markets. US stocks and bonds rallied and the US dollar sold off after the minutes from this month’s Federal Reserve meeting showed most committee members were ready to slow this year’s aggressive pace of interest rate hikes.
“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated.
Market pricing following the release of the minutes indicated traders expect the Fed to raise by half a percentage point at each of the next two meetings, breaking a run of four straight increases of three-quarters of a percentage point. The Bank of Korea this morning mirrored the RBA by raising its key rate by a quarter of a percentage point following several increases of half a percentage point.
The S&P 500 climbed 0.59 per cent ahead of tonight’s Thanksgiving holiday. The rate-sensitive Nasdaq jumped 0.99 per cent.
“Tuesday’s ‘Happy (for markets) Thanksgiving’ theme has extended,” NAB’s head of FX strategy, Ray Attrill, said.
Thanksgiving week has historically been supportive for stock prices. The S&P 500 has risen more than two-thirds of the time over the last 72 years. The thinly-traded Wednesday-Friday period is even more reliable: the index has risen on 60 of 72 occasions.
Wall Street closes tonight for the holiday and reopens on Friday for a poorly-patronised morning session.
The ASX 200 has been on the rise since a minor wobble on Monday, setting it on course for its fourth weekly advance in five weeks.
Going up
The S&P/ASX index of gold miners climbed 2.8 per cent to a five-month high as a decline in the US dollar encouraged investors to explore alternative stores of wealth. The industry was one of the most prominent victims of this year’s surge in the greenback, falling to a five-year low in September.
St Barbara rallied 6.61 per cent this morning. Ramelius gained 4.57 per cent, Silver Lake Resources 4.18 per cent and sector heavyweight Newcrest 2.74 per cent.
Regis Resources climbed 1.05 per cent after Chair James Mactier told today’s AGM the firm expects to benefit from recent investments and an improving gold price.
“Recently, buying of gold by central banks, a weaker USD, stabilising bond yields, continued geopolitical risk and the unravelling of crypto “currencies” are combining to give renewed support to the gold price and gold equities. This, combined with our own improving performance and growth initiatives, bodes well for the future of our company,” Mactier said.
The rate-sensitive tech sector rallied on the promise of relief from the spiralling cost of borrowing. BrainChip gained 6.12 per cent, WiseTech 3.14 per cent and Megaport 2.9 per cent. Altium firmed 2.32 per cent.
An upbeat trading update lifted payments platform Tyro 0.67 per cent. CEO Jon Davey told today’s AGM the firm was “tracking toward the top end of all operating metrics” provided in October. Transaction values through the first four months were up 52 per cent over the same period last year. Gross profit increased by 57 per cent.
Kogan jumped 9.93 per cent on news the online retailer has made progress on reducing an inventory overhang. Founder and CEO Ruslan Kogan said costs fell this half as inventory levels declined. Margins were expected to improve in the second half once discounted inventory flowed through.
“We look to the second half of FY23 with confidence as the Kogan Group returns to being an agile, inventory-light business with strong operating margins,” Kogan told this morning’s AGM.
PointsBet bounced 5.59 per cent after launching its online sports betting operation in Maryland. The launch expanded the firm’s offering to 13 US states.
Property group GPT gained 1.88 per cent after selling two business parks in Sydney and Melbourne. The sale price represented a 1.5 per cent discount to the book value at June 30. Proceeds will be used to pay down debt.
Going down
Coal miners unwound much of their gains over the last two sessions. Whitehaven dived 7.69 per cent on news CEO Paul Flynn sold 900,000 shares. New Hope shed 6.58 per cent. Coronado fell 4 per cent.
AGL Energy dipped 1.26 per cent after announcing its Torrens Island ‘B’ power station in South Australia will close in 2026. The closure will not have a material impact on underlying profit.
Other heavyweight drags today included Santos -0.8 per cent, Woodside -0.75 per cent and Coles -0.58 per cent.
Harvey Norman eased 1.77 per cent as negative currency movements and a sales decline in Ireland took some of the shine off an otherwise positive trading update. Aggregated sales revenues increased 6.9 per cent through the first four months compared to the same period last year. Sales improved in Australia, Malaysia, Singapore, Slovenia and Croatia.
Among stocks trading ex-dividend, ALS Ltd dropped 0.68 per cent and Terracom shed 14.52 per cent. Nufarm gained 0.24 per cent.
Other markets
A positive session on Asian markets lifted the Asia Dow 1.16 per cent, China’s Shanghai Composite 0.26 per cent, Hong Kong’s Hang Seng 0.86 per cent and Japan’s Nikkei 1.26 per cent.
US futures edged higher ahead of tonight’s market holiday. S&P 500 futures firmed 10 points or 0.25 per cent.
Oil added to last night’s 3.3 per cent decline, which came as the G7 debated where to set a price cap for Russian crude. Brent crude slid nine US cents or 0.1 per cent to US$85.05 a barrel.
Gold rallied after the Fed minutes undercut the greenback. The yellow metal rallied US$8.50 or 0.5 per cent to US$1,754.40 an ounce.
The dollar eased 0.06 per cent to 67.42 US cents after jumping more than 1 per cent overnight.
