Australian shares creep higher despite RBA’s tough talk
Derek Rose |
The Australian share market has crept higher, shaking off hawkish comments by a Reserve Bank official that gave fresh hints a Melbourne Cup Day rate hike is a real possibility.
The benchmark S&P/ASX200 index finished Wednesday 14.4 points higher at 8831.3, a gain of 0.16 per cent, while the broader All Ordinaries rose 12.4 points, or 0.14 per cent, to 8956.6.
The ASX200 had been down by 0.2 per cent around lunchtime, after RBA deputy governor Andrew Hauser told a Sydney investment conference the inflation outlook was “materially worse” than the central bank had forecast and businesses were beginning to view 3.5 per cent inflation as the “new normal”.
Betashares chief economist David Bassanese said the RBA’s recent comments indicated it had lost patience on inflation and was willing to risk a recession to bring it down.
Mr Bassanese expects the central bank will raise rates at its next meeting, on November 3, otherwise known as Melbourne Cup Day.
“Another RBA hike is increasingly looking like a live runner, rather than a dark horse,” agreed Global X ETF strategy analyst Joseph Marassa.
The Australian dollar climbed to a three-week high on Mr Hauser’s remarks, buying 70.13 US cents, from 69.81 US cents at 5pm on Tuesday.
Seven of the ASX’s 11 sectors finished higher and three closed lower, with health care basically flat.
The tech sector was the biggest loser, falling 3.3 per cent amid a plunge by data centre operator NextDC.
Shares in the Brisbane-based company crashed 41.7 per cent to an eight-year low of $5.35 after announcing that power supply issues at its flagship site in Melbourne would cost it $140 million in lost earnings.
It is now reducing capital expenditures and considering selling off development sites to conserve cash.
Other tech players had a better day, with Xero and Megaport both rising five per cent and Life360 adding 4.8 per cent.
In the mining sector, BHP dropped 1.6 per cent to $58.54 ahead of its annual general meeting on Thursday, while Rio Tinto fell 1.5 per cent to $152.55.
Gold miners Northern Star and Westgold finished up 1.8 per cent and 2.2 per cent, respectively, on quarterly production updates, but most of their peers finished in the red.
Evolution dropped 1.6 per cent, Newmont retreated 1.9 per cent, and Regis Resources subtracted 2.6 per cent.
The big four banks all finished higher, with NAB growing 1.9 per cent to $39.93, Westpac adding 1.1 per cent to $35.53, CBA climbing 0.9 per cent to $157.01 and ANZ advancing 0.6 per cent to $39.22.
In health care, Telix Pharmaceuticals dropped 7.9 per cent to a two-month low of $14.52 after the radiopharmaceutical company said its third-quarter revenue rose 19 per cent to $US245 million ($349 million).
Sigma Health dropped 2.8 per cent after the Chemist Warehouse owner said sales of discretionary items like perfumes, vitamins and supplements were down amid cost-of-living pressures.
In industrials, Transurban rose 3.0 per cent to $14.05 after announcing that average daily traffic on its toll roads was up 3.1 per cent in the September quarter, compared to a year ago.
ON THE ASX:
* The S&P/ASX200 rose 14.4 points, or 0.16 per cent, to 8831.3
* The broader All Ordinaries climbed 12.4 points, or 0.14 per cent, to 8956.6
One Australian dollar trades for:
* 70.17 US cents, from 69.81 US cents at 5pm on Tuesday
* 110.98 Japanese yen, from 110.42 Japanese yen
* 62.52 euro cents, from 62.17 euro cents
* 52.46 British pence, from 52.37 pence
* 123.65 NZ cents, from 122.96 NZ cents
AAP