ASX has best week since 2022 despite ceasefire strain
Adrian Black |
Australia’s share market has notched its best week since October 2022, despite slipping ahead of key US-Iran ceasefire talks and with little sign Iran’s Hormuz Strait blockade is easing.
The S&P/ASX200 slipped 12.6 points on Friday, down 0.14 per cent, to 8,960.6, as the broader All Ordinaries lost 13.1 points, down 0.14 per cent, to 9,155.8.
Despite the pullback, the top-200 charged more than four per cent higher for its best week since October 2022, buoyed by a fragile US-Iran ceasefire ahead of talks that could reopen the Strait of Hormuz, a choke point for a fifth of global oil and gas shipments.
There was hope the discussions could pave an end to the conflict that has raged for almost six weeks, despite signs the ceasefire was off to a shaky start, AMP chief economist Shane Oliver said.
“The key thing to watch for remains a significant and sustained pick up in the number of ships coming through the Strait of Hormuz – it has picked up but it’s a fraction of normal levels,” Dr Oliver said.
“But if this were to occur, even with Iran collecting a fee, it could allow the war to continue but with less impact on the global economy and markets.”
Energy stocks eased slightly as oil prices crept higher towards the end of the week, with the West Texas benchmark trading near $US99.60, down from above $112 before the truce was announced.
Oil and gas giants Woodside and Santos have lost ground, but each are trading more than 17 per cent higher than their pre-conflict prices.
Refinery operators Ampol and Viva ended Friday either side of break-even, with Viva edging 0.4 per cent higher after the federal government approved its planned gas export facility in Geelong near a Ramsar wetlands.
The ceasefire has returned some confidence to airlines Qantas and Virgin Australia, with Virgin snapping a seven-week losing streak.
The raw materials sector fell on Friday but was up more than six per cent for the week, as hopes the energy shock could settle brightened the global growth outlook.
Mega miners BHP, Rio Tinto and Fortescue dipped in the week’s final session, after iron ore futures slipped on Thursday as China reported record stockpiles.
Gold clocked a third straight week of gains to trade near $US4750 ($A6,722), but the precious metal remains at a more than 11 per cent discount to its pre-war price.
The Australian dollar is buying 70.62 US cents, up from 70.39 US cents on Thursday at 5pm.
Consumer discretionary stocks and real estate trusts rebounded during the week as confidence improved, but both have been sliding since October due to sticky inflation and higher interest rate expectations.
Australia’s interest rate outlook remains largely unchanged despite the uptick in sentiment, with markets pricing two more Reserve Bank rate hikes by December.
“The key issue for Australia, and for the domestic interest rate outlook, is how much of the energy price shock is already being passed through to prices of other goods and services,” Westpac chief economist Luci Ellis said.
“The RBA will be watching for this kind of behaviour, including through its liaison program, and will see it as a further leg up in underlying inflation from a rate that was already higher than desired.”
The central bank will make its next rates decision on May 5.
ON THE ASX:
* The S&P/ASX200 fell 12.6 points, or 0.14 per cent, to 8,960.6.
* The broader All Ordinaries slipped 13.1 points, or 0.14 per cent, to 9,155.8.
One Australian dollar trades for:
* 70.62 US cents, from 70.39 US cents at 5pm AEDT on Thursday.
* 112.46 Japanese yen, from 111.80 Japanese yen.
* 60.43 euro cents, from 60.36 euro cents.
* 52.63 British pence, from 52.56 British pence.
* 120.89 NZ cents, from 120.63 NZ cents.
AAP