ASX moves higher on mining, energy

Derek Rose | July 14, 2022

The Australian share market has closed higher, with gains for the iron ore miners and coalminers outweighing losses by the big banks and property trusts.

The benchmark S&P/ASX200 index on Thursday closed up 29 points to 6,650.6, a rise of 0.44 per cent, while the broader All Ordinaries gained 40.8 points to 6,848.6, a 0.6 per cent rise.

City Index analyst Tony Sycamore said that the Australian market was showing signs of resiliency even as a red-hot US consumer price index rise of 9.1 per cent indicated inflation had not yet peaked in the world’s biggest economy.

“That was a shock, that number,” Mr Sycamore told AAP.

“In the grand scheme of things, it raises the possibility that we get a 100 basis point rate hike when the Fed meets in two weeks time. So that’s the real danger for me.”

In Australia, economists saw the chances of aggressive interest rates also increasing after the unemployment rate fell more than expected, from 3.9 per cent in May to 3.5 per cent in June.

That’s the lowest jobless rate since 1974, a level that the Reserve Bank hadn’t forecast Australia hitting until mid-2023.

“But at the end of the day, you can’t keep tightening rates without breaking something, and the risk therefore becomes if you’ve tamed inflation, but you’ve broken something,” Mr Sycamore told AAP. “That’s where we’re at at this point in time.”

All of the big banks were lower on Thursday as the market digested the possibility of another big rate hike in August, which could hurt the property market and diminish the value of the banks’ mortgage books.

CBA dropped 1.5 per cent to $93.22, Westpac fell 1.1 per cent to $19.94, ANZ retreated 2.2 per cent to $21.93 and NAB dipped 0.5 per cent to $28.30.

Property trusts were also lower in the face of higher rates, collectively falling 1.2 per cent, with Charter Hall and GPT Group both down 2.0 per cent and Mirvac retreating 2.4 per cent. 

But the mining sector was up 1.6 per cent, although it’s still on track to fall to finish lower for a sixth week in a row.

“This was the golden child four months ago, three months ago, and then it’s just fallen out of favour – but there is signs of support now,” Mr Sycamore said. “Maybe we’ve seen the worst of that wash out.” 

BHP rose 1.3 per cent to $37.40, Fortescue climbed 2.5 per cent to $17.41 and Rio Tinto gained 2.0 per cent to $96.01.

The energy sector was up 1.7 per cent, buoyed by a strong day for coalminers. 

Yancoal was up 10.3 per cent, New Hope gained 6.5 per cent and Whitehaven climbed 5.7 per cent, with the latter two firms hitting multi-year highs.

“You’ve got these coalminers just absolutely going nuts because of the fear that Russian gas will get turned off, and there’s talk that China will reverse its unofficial ban and start taking Australian coal imports again,” Mr Sycamore said. 

In healthcare, CSL was up for a 10th day in a row, by 0.8 per cent to a six-month high of $296.20. 

The blood products giant is up 10 per cent so far this month, boosted in part by the strength of the US dollar that it reports earnings in.

The tech sector was the biggest gainer, up 2.0 per cent as Technology One rose 3.2 per cent, Xero climbed 2.0 per cent and EML Payments clawed back some of Monday’s losses with a 12.3 per cent gain. 

Also, Data#3 soared 9.9 per cent after the Brisbane business technology company said it expected a full-year net profit of $44 million, up 19 per cent from last year.

The Australian dollar meanwhile was buying 67.509 US cents, from 67.66 US cents at Wednesday’s close.

ON THE ASX:

* The benchmark S&P/ASX200 index on Thursday closed up 29 points, or 0.44 per cent, at 6,650.6.

* The broader All Ordinaries gained 40.8 points, or 0.6 per cent, to 6,848.6.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 67.59 US cents, from 67.66 US cents at Wednesday’s close

* 93.95 Japanese yen, from 92.81 yen

* 67.53 Euro cents, from 67.39 cents

* 57.11 British pence, from 56.75 pence

* 110.59 NZ cents, from 110.38 cents