ASX gains, but finishes week down 1.2pct

Neve Brissenden and Derek Rose | December 9, 2022

Australian shares have snapped a three-day losing streak as renewed confidence in China’s economy on loosening COVID-19 restrictions propelled major miners to six-month highs.

The benchmark S&P/ASX200 index closed Friday up 37.7 points, or 0.53 per cent, to 7213.2, while the broader All Ordinaries climbed 37 points, or 0.5 per cent, to 7406.4.

“I think it’s pretty much risk-on sentiment from the US overnight,” said CMC Markets analyst Azeem Sheriff. “No major news that’s driving it, except the commodity prices from the US market session.”

But three days of midweek losses mean the ASX200 finished the week down 1.21 per cent in its worst loss since the week ending October 21, when it also dropped 1.2 per cent.

Mr Sheriff said inflation data from Europe and China as well as the Reserve Bank rate hike on Tuesday contributed to the midweek slump.

“So I think that provided a bit of negative sentiment towards the recession probably looming a lot closer than we think,” he said.

The RBA’s guidance indicated the central bank expects both rate hikes and inflation to continue into the new year, Mr Sheriff noted.

“So I think that kind of narrative was basically suggesting to the market that the fight is not over. It might be getting slightly better, but it’s not over.”

The market did manage to close to the highs of the day on Friday, after being up just 0.2 per cent at lunchtime.

The mining sector was the big gainer, rising 1.9 per cent as BHP, Rio Tinto and Fortescue Metals all hit their highest levels in six months.

The Big Australian gained 2.7 per cent to $47.48, while Rio gained 2.3 per cent to $117.16 and Fortescue added 2.8 per cent to $21.39.

Goldminers in general managed to recoup their morning losses to finish in the green, with Evolution up 2.4 per cent and Northern Star adding two per cent.

The energy sector fell 0.2 per cent as Brent crude remained under $US77 a barrel, its lowest level since last December.

Woodside dipped 0.8 per cent to $34.18 and Santos retreated 0.4 per cent to $7.06, while Beach Energy gained 0.9 per cent to $1.66 as the Kerry Stokes-backed gas company bowed out of a three-way battle for Perth Basin junior gas explorer Warrego Energy, declining to match a $341 million bid by Gina Rinehart’s Hancock Energy.

The big banks all remained relatively steady, with ANZ rising 0.2 per cent to $23.64, NAB also up 0.2 per cent to $30.18, Westpac up 0.4 per cent to $23.395 and CBA edging 0.45 per cent lower at $104.9.

Healius closed flat at $2.88 as the pathology and diagnostic chain announced it would sell its 11 day hospitals for $136.8m to Nexus Hospitals, owned by the Queensland Investment Corporation.

Star Entertainment Group went into a trading halt shortly after the open, an hour before Queensland’s attorney-general announced a $100 million fine for the gaming giant for neglecting its anti-money laundering and responsible gaming duties, and deliberately misleading the regulator. 

Bigtincan Holdings dropped 21.5 per cent to 57.5c after the Sydney-based sales software company on Thursday went ahead with a $35 million capital raising despite objections from its biggest shareholder and tentative takeover suitor, SQN Investors.

Meanwhile, the Australian dollar had rebounded to a four-day high, buying 67.82 US cents, from 67.11 at Thursday’s ASX close.

Looking forward, next week the central banks of the United States, Europe and England will announce decisions on interest rates – all within a 20-hour period. 

“I think it’s going to be make or break,” Mr Sheriff said. “It’s not the result, it’s more the commentary that comes after it. I think that’s what traders or investors will be eagerly watching, how they see the state of the economy.”

The commentary from the US Federal Reserve will be particularly important, especially its prediction about the “terminal rate” that rates will peak at next year, Mr Sheriff said.

“The US will be the most important as we head into the new year, because that will kind of provide the foundation for the rest of the world,” he said.

ON THE ASX:

* The benchmark S&P/ASX200 index on Friday gained 37.7 points, or 0.53 per cent, to 7213.2.

* The broader All Ordinaries added 36.9 points, or 0.5 per cent, to 7406.3.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 67.82 US cents, from 67.11 US cents at Thursday’s ASX close

* 92.33 Japanese yen, from 92.01 Japanese yen

* 64.11 Euro cents, from 63.95 Euro cents

* 55.31 British pence, from 55.10 British pence

* 106.01 NZ cents, from 105.66 NZ cents.