The numbers
The Australian sharemarket rallied in late trade to finish less than a point shy of its record closing high after government data showed retail sales were softer than expected in January,boosting optimism that the Reserve Bank’s interest-rate cuts are gaining traction in its fight against inflation.
Wall Street had a listless run overnight.Bloomberg
The S&P/ASX 200 climbed 38.3 points,or 0.5 per cent,to 7698.7 at the close on the last day of company reporting season. The local benchmark index hit a record intraday high of 7703.8 points. Its record close was 7699.4 points on February 2.
Retail sales rose 1.1 per cent in January,from December – below market expectations of 1.5 per cent – the Australian Bureau of Statistics said. The report comes a day after data showed Australian at 3.4 per cent when economists had predicted an acceleration. The more subdued sales and consumer price growth suggest the RBA’s tightening cycle is working as it seeks to rein in inflation.
Retail sales can be an important consideration in policy decisions,given consumption accounts for more than half of all gross domestic product,and the RBA has repeatedly highlighted the outlook for domestic consumption as a key uncertainty. The central bank is likely to leave its key interest rate at a 12-year high of 4.35 per cent next month,with a tightening bias,in an effort to tame inflation further,economists predict.
The lifters
Interest-rate sensitive real estate investment trusts led the advances,with the sector’s shares gaining 1.73 per cent. Heavyweights Goodman Group (up 3.75 per cent),Scentre Group (up 1.3 per cent) and Stockland Corp. (up 0.45 per cent) all traded higher.
Looking at the session’s best performers,Ramsay Healthcare (up 7.27 per cent) led gains in large-cap stocks,even after cutting its dividend and warning that profit margins were under pressure because of rising costs.
South32 rallied 4.61 per cent after flagging a potential deal to sell its Illawarra coal business,while Harvey Norman jumped 4.43 per cent after releasing its earnings report. The company said its white goods and furniture sales and earnings were down in the six months to December,but executive chairman Gerry Harvey said the business was well-placed for a rebound.
Shares in Star Entertainment Group rose 8.33 per cent after it for the December half. The casino giant reported its results a week behind schedule after a decision by the NSW regulator to into its suitability to operate.
The laggards
Utilities (down 0.33 per cent) was the only sector trading in the red at the end of the last trading day of February,amid a slump in the share price of APA Group (down 1.38 per cent),Mercury NZ (down 1.87 per cent) and AGL (down 0.58 per cent).
Resmed (down 4.55 per cent) was the weakest performing large-cap amid a sell-off by insiders,followed by lithium miners IGO (down 2.46 per cent) and Lynas Rare Earths (down 2.18 per cent).
The Australian dollar fell 0.7 per cent to US64.95¢. The local currency has lost 4.6 per cent this year amid expectations that interest rates in major economies will stay higher for longer.
The lowdown
MPC Markets head of equities Mark Gardner said investors are awaiting key inflation data out of the United States – the Personal Consumption Expenditures Price Index – to be released at midnight.
“The market has had really low volume,and we’ve all just been sitting around and twiddling our thumbs awaiting that key data,” Gardner said. “Anything showing a rebound in inflation is going to be very negative for the market.” He said Thursday’s market gains were broad-based,as opposed to being buoyed by index heavyweights.
On Wall Street overnight,the S&P 500 closed 0.2 per cent lower,continuing a quiet and listless run since it set a record last week. The Dow Jones lost 0.1 per cent,and the Nasdaq composite was 0.6 per cent lower a day after pulling within 0.1 per cent of its record set in 2021.
Bitcoin hit $US61,000 for the first time since 2021.Getty
Treasury yields were also holding relatively steady in the bond market after a report said the US economy likely grew a touch slower at the end of 2023 than earlier estimated. The growth was nevertheless still solid,as the economy continues to defy expectations of a recession despite high interest rates meant to bring down inflation.
Coinbase gained 0.8 per cent to continue its strong run as Bitcoin’s price keeps rallying. New exchange-traded funds that make investing in Bitcoin easier have raised interest in the cryptocurrency,with BlackRock’s iShares Bitcoin fund alone quickly growing to $US7 billion ($10.8 billion) in assets,for example.
That has helped bitcoin’s price top $US61,000 for the first time since 2021. It is pulling closer to its record of nearly $US69,000 after rising more than 40 per cent so far this year. It was 8.3 per cent higher at $US61,677 at 1.50pm AEDT,according to Bitstamp.
Apple,plus Google’s parent company Alphabet,were among the heaviest weights on the US market. Those stocks are among a small group that has been disproportionately responsible for the S&P 500’s run to records,which is often a concerning signal,according to Scott Wren,senior global market strategist at Wells Fargo Investment Institute. Broad gains among a wide variety of stocks are typically a more favourable sign that strength can continue.
Stocks fell 1.9 per cent in Shanghai and 1.5 per cent in Hong Kong. China’s largest private property developer,Country Garden,said on Wednesday after failing to repay a term loan facility worth 1.6 billion Hong Kong dollars ($US204.5 million).
The move comes after China Evergrande,the world’s most heavily indebted real estate developer,was ordered to undergo liquidation following a failed effort to restructure $US300 billion in late January.
Tweet of the day
Quote of the day
“I am not going to name the individual:we are a rule-of-law country,and if they’re not doing it now,they’re not breaking the law,so there’s nothing our mates in the Australian Federal Police can do,nor should they,”,defending his refusal to name the former politician who allegedly sold-out Australia to foreign spies.
“If we see them go active again,and they need our attention,the taskforce’s attention,or the federal police’s attention,I can guarantee they will get it.”
You may have missed
Peter Dutton and his shadow treasurer,Angus Taylor,have ramped up their attacks on the government’s handling of the economy over recent weeks,and they’re getting louder in the lead-up to the Dunkley byelection..
With AP,Bloomberg
The Market Recap newsletter is a wrap of the day’s trading..