The Wrap:ASX hits seven-month high after Fed chief sparks Wall Street rally

Welcome to your five-minute recap of the trading day and how the experts saw it.

The numbers:Australia’s sharemarket closed higher on Thursday as US stocks surged after Fed chief Jerome Powell hinted that the pace of interest rate rises was likely to slow.

The S&P/ASX200 index gained 0.9 per cent,or 65.50 points,to 7349.70,setting a new 100-day high as materials continued to bolster the index.

Markets surged after Jerome Powell’s speech.

Markets surged after Jerome Powell’s speech.afr

The lifters:Gold miners were sharply higher,with Newcrest jumping 4.3 per cent,Northern Star up 3 per cent and Bellevue Gold up 6.4 per cent.

The laggards:The energy sector had a sluggish day with coal stocks taking a hit as investors mulled over the prospect of federal government intervention in the energy market. Whitehaven dipped 1.5 per cent and New Hope dropped 1.2 per cent. Gas major Woodside closed the session 1.7 per cent weaker.

The lowdown:

It was a buoyant session for the index,which hit a seven-month high off the back of the materials sector booming.

Ben Clark,portfolio manager at TMS Capital,said that the news overnight that the Fed could start to curb rates rises had a very positive effect on the Australian market,with interest rates and inflation the reason that the market has been so volatile.

“What you’re seeing today is that the stocks that have been punished this year because of what’s happening with interest rates,they’re leading the charge today.”

Clark said that riskier assets such as in technology had a particularly positive day with investors not scared away by news of more rate rises. Cloud accountancy heavyweight Xero was a key example,gaining 6.2 per cent,along with gambling company Aristocrat Leisure which was up 2.9 per cent.

BHP spin-off South32 was one of the best performing stocks of the day,surging 6.7 per cent as raw material prices roared back after China announced a new vaccination plan. James Hardie Industries similarly performed well on Thursday,closing 5.4 per cent higher.

Medibank hackers released a massive data file overnight which contained more sensitive customer data;however,their shares didn’t seem to be affected by the latest release,closing 1.7 per cent higher.

Domino’s Pizza put its shares in a trading halt before the market opened on Thursday andannounced that it had commenced an equity capital raising to raise up to $165 million. Domino’s Group CEO Don Meij said that the funding would help feed the business’ appetite for offshore expansion.

The banking sector performed well,with all four big banks closing in the green,the best performing of them being ANZ which was up 0.9 per cent.

The Australian dollar soared as the greenback weakened,fetching 68.07 US cents at market close

Overnight Wall Street was trading in negative territory for much of the session,but the S&P 500 soared late to close 3.1 per cent higher while the Dow Jones jumped by 2.1 per cent and the Nasdaq surged by 4.4 per cent.

Fed officials have signalled they plan to raise their benchmark rate by 50 basis points at their final meeting of the year on December 13-14,after four successive 75 basis-point hikes which have lifted it to a 3.75 per cent to 4 per cent target range.

The economy has been slowing,but contains strong pockets that have given markets hope that a recession could be avoided.

Traders also scoured several economic reports,with key gauges of US activity painting a mixed third-quarter picture. Job openings fell in October – a hopeful sign for the Fed as it seeks to curb demand.

The figures precede Friday’s jobs report,which is currently forecast to show employers added 200,000 workers to payrolls in November. Economists are expecting the unemployment rate to hold at 3.7 per cent,and for average hourly earnings to moderate.

“You’re still not in a recession yet,but growth is slowing,and you’re just seeing this volatility of trying to price this in. It’s a challenge,” Matt Miskin,co-chief investment strategist at John Hancock Investment Management,said at Bloomberg’s New York headquarters.

“It’s like a traffic light going red-green,red-green.”

Tweet of the day:

Quote of the day:

“I made a lot of mistakes. There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone,” said Sam Bankman-Fried,thedisgraced founder of the bankrupt FTX crypto empire.

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With Bloomberg,AP

The Market Recap newsletter is a wrap of the day’s trading.Get it each weekday afternoon.

Billie Eder is a reporter at The Sydney Morning Herald and The Age

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