ASX rallies on suggestion of Fed pivot
Derek Rose |
Australian shares have enjoyed broad gains following indications the US Federal Reserve might slow the pace of its tightening cycle later this year.
The benchmark S&P/ASX200 index finished Monday up 102.6 points to 6779.4, a 1.54 per cent gain. The broader All Ordinaries rose 108.5 points, or 1.58 per cent, to 6979.4.
“We had a pretty good, broad-based rally, underpinned by very strong US markets on Friday night, and also the leading indicator for tonight (in the US) is pointing to a pretty strong market as well,” said Tribeca Investment Partners portfolio manager Jun Bei Liu.
The gains came after The Wall Street Journal reported on Friday the US central bank was “barrelling towards” another 75 basis point rate hike next month – but then would debate hiking in smaller increments.
The article was penned by the newpaper’s chief economics correspondent, Nick Timiraos, dubbed the “Fed whisperer” for his in-the-know reporting.
San Francisco Fed President Mary Daly added to the column’s credibility by declaring in a talk at the University of California, Berkeley, that it was “time … to start planning for stepping down” the pace of rate hikes.
“Sounds like the language out of the Fed is becoming a little bit more pragmatic, just given the volatility around the world, with what’s happening in the UK, what’s happening in Japan, all these unprecedented interventions to support currency,” Ms Liu told AAP.
“And then the inflation pressure is showing early signs of – of not falling, but in terms broad-based increases, is weakening.”
Every ASX sector gained ground on Monday, with mining leading the way with a 2.5 per cent gain.
BHP climbed 2.6 per cent to $39.06, Fortescue Metals rose 2.5 per cent to $16.77 and Rio Tinto added 1.2 per cent to $92.59.
Goldminer Evolution climbed 7.7 per cent to $1.95, and Northern Star added 5.0 per cent to $8.36.
Newcrest was up 2.9 per cent to $17.32, despite advising of a “critical incident” at its Brucejack mine in British Columbia, Canada.
A team member from Newcrest’s contractor Procon was said to be involved, but details are scarce. A mine rescue team is in the process of making safe entry to the incident location.
Both South32 and OZ Minerals slid after cutting full-year guidance.
South32 dipped 1.9 per cent to $3.65 after a job action hampered coking coal production at its Appin mine in NSW. OZ fell 1.2 per cent to $25.11 after trimming gold production forecasts from its Prominent Hill mine in SA while reporting higher costs.
In the heavyweight financial sector, CBA rose 1.2 per cent to $100.48, NAB climbed 0.7 per cent to $31.63, Westpac added 0.6 per cent to $23.87 and ANZ closed up 0.2 per cent to $25.59. Also, Macquarie grew 2.4 per cent to $161.46.
Ms Liu noted two sectors that were among the biggest gainers were tech and consumer discretionary, both of which have been hard hit recently.
Consumer discretionary shares rose 1.7 per cent, with Wesfarmers adding 2.1 per cent to $44.18, Myer climbing 7.3 per cent to a three-year high of 66.5c, and online luxury fashion retailer Cettire soaring 22.1 per cent to a six-month high of $1.55.
Tech was up 2.3 per cent, with Xero climbing 3.5 per cent and Megaport adding 5.9 per cent.
In the energy sector, Queensland coalminer Stanmore Resources rose 4.4 per cent to an all-time closing high of $2.88, and Whitehaven Caol was up another 3.4 per cent to $10.85.
The Australian dollar meanwhile had gained ground against its US counterpart, which weakened on the suggestion of a Fed pivot.
The Aussie was buying 63.41 US cents, from 62.58 US cents at Friday’s close, and had earlier hit a two-week high of 64.11 US cents.
Looking ahead, Federal Treasurer Jim Chalmers will deliver his first budget on Tuesday, and the Australian Bureau of Statistics will announce both monthly and September quarter consumer price index figures on Wednesday.
ON THE ASX:
* The benchmark S&P/ASX200 index on Monday gained 102.6 points to 6770.4, a gain of 1.54 per cent.
* The broader All Ordinaries advanced 108.5 points, or 1.58 per cent, to 6978.4.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 62.57 US cents, from 62.58 US cents at Friday’s close
* 94.28 Japanese yen, from 94.11 yen
* 64.22 Euro cents, from 64.07 Euro cents
* 55.64 British pence, from 55.98 pence
* 110.37 NZ cents, from 110.76 NZ cents.
AAP
