The Australian sharemarket has bounced back into green on Friday buoyed by lithium miners, as investors digested a positive lead from Wall Street overnight.
The S&P/ASX 200 was up 18.6 points, or 0.3 per cent, to 7043.4 at midday, despite most sectors trading in the red. The Australian dollar jumped overnight. It was fetching 64.44 US cents at 6.54am AEST.
Wall Street is on its way to a positive session.Credit: AP
Lithium miners led the charge on the local bourse, bolstering the mining sector (up 1.4 per cent), with IGO (up 3.3 per cent), Allkem (up 3.3 per cent) and Pilbara Minerals (up 2.4 per cent) all stepping up. Iron ore heavyweights BHP (up 1.5 per cent), Fortescue (up 1.1 per cent) and Rio Tinto (up 1.1 per cent) were also stronger on the back of a 1.7 per cent increase in iron ore prices overnight.
South32 (up 3.5 per cent) was among biggest large-cap advancer along with Mineral Resources (up 2.6 per cent), and investment firm Washington H Soul Pattinson (up 1.5 per cent), which pared back some of its losses from Thursday.
Consumer discretionary companies (up 0.2 per cent) were also stronger, led by a 1.3 per cent increase in Aristocrat Leisure shares. Financials (up 0.05 per cent) were also in the green despite CBA losing 0.3 per cent as ANZ added 0.4 per cent and NAB gained 0.3 per cent.
Meanwhile, Santos (down 0.6 per cent) weighed the energy sector (down 0.3 per cent) amid a 1.3 per cent decrease in Brent crude oil prices overnight. Coal miners Yancoal (down 0.9 per cent), Whitehaven (down 1.4 per cent) and New Hope (down 0.8 per cent) were also weaker, along with healthcare companies (down 0.5 per cent) as Resmed (down 2 per cent) declined.
Liontown (down 1.3 per cent) bucked the trend among lithium miners and joined Atlas Arteria Group (down 2.1 per cent) and IAG (down 1.7 per cent) among the biggest large-cap decliners.
Wall Street ticked higher to trim its sharp loss for September after pressure squeezing it from the oil and bond markets relaxed a bit.
The S&P 500 rose 0.6 per cent, the Dow Jones added 0.3 per cent and the Nasdaq composite gained 0.8 per cent.
A drop in oil prices took some heat off the stock market, a day after crude reached its highest price of the year. Treasury yields also relaxed to give the stock market more of a breather, particularly Big Tech companies.
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A 2.1 per cent climb for Meta Platforms and 1.5 per cent gain for Nvidia were two of the strongest forces lifting the S&P 500.
Stocks, though, are still on track for their worst month of the year as Wall Street grapples with a new normal where interest rates may stay high for a while. The Federal Reserve has pulled its main interest rate to the highest level since 2001 in hopes of extinguishing high inflation, and it indicated last week it may cut rates by less next year than earlier expected.
The threat of higher rates for longer has pushed Treasury yields up sharply in the bond market. The yield on the 10-year Treasury climbed above 4.67 per cent in the morning, near its highest level since 2007. It later fell back to 4.57 per cent, down from 4.61 per cent late Wednesday.
The two-year Treasury yield, which moves more on expectations for Fed action, slipped to 5.06 per cent from 5.14 per cent.
Yields squiggled following the latest batch of reports on the economy.
One said fewer workers applied for unemployment benefits last week than economists expected. It’s the latest signal of a solid job market, one that has helped prevent a recession but may also be feeding upward pressure into inflation.
A separate report said the US economy grew at a 2.1 per cent annual rate during the summer, following some revisions to earlier estimates. That was below economists’ expectations, but economic growth looks like it’s remained solid through the third quarter at least. The question is how the trend goes in the final three months of the year.
Altogether, the reports didn’t give anything to change investors’ minds about the Fed staying tough on interest rates, something that Wall Street calls a “hawkish” stance on policy.
Many other challenges are also looming over the economy and Wall Street besides the threat of higher interest rates for longer.
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Most immediate is the threat of another US government shutdown as soon as this weekend, though financial markets have held up rather well during past shutdowns.
Another threat eased a bit, as crude oil prices pulled back. A barrel of benchmark US crude oil sank $US1.97 to settle at $US91.71. It’s still up sharply from below $US70 during the summer, which has added to worries about inflation. Brent crude, the international standard, also fell by more than $US1 per barrel.
In stock markets abroad, the Hang Seng fell 1.4 per cent in Hong Kong as trading in shares of property developer China Evergrande Group was suspended. The company said authorities had informed it that its chairman, Hui Ka Yan, had been subjected to “mandatory measures in accordance with the law due to suspicion of illegal crimes.”
Evergrande is the world’s most heavily indebted real estate developer and is at the centre of a property market crisis that is dragging on China’s economic growth.
With AP
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