Bumpy ride as sharemarket claws back early losses to close slightly down

The Australian sharemarket had a bumpy ride on Thursday as investors marked down stocks sensitive to interest rate rises and some miners slumped following reports the Trump administration is moving away from a rare-earths price floor.

After seeing red in morning trade, the S&P/ASX 200 clawed back its early losses to close down just 6.4 points at 8927.5, propped up by three of the local market’s 11 industry sectors.

Gains among energy and mining companies balanced the market, although rare earth miners Lynas and Iluka Resources bore the brunt of a Reuters report suggesting US President Donald Trump may wind back a proposed price floor for the minerals.

Lynas fell 3.7 per cent and Iluka Resources plunged 14.02 per cent after it also revealed a $565 million pre-tax impairment for the year ending December 31. Retailers and tech stocks that are more averse to interest rate rises also suffered. JB Hi-Fi fell 2.27 per cent and WiseTech Global lost 2.2 per cent.

Energy stocks are being boosted by oil prices hitting a fresh four-month high after US President Donald Trump threatened another attack on Iran, urging Tehran to negotiate a nuclear deal. Woodside added 0.72 per cent, Santos climbed 0.29 per cent and Whitehaven Coal jumped 2.94 per cent after it reported robust sales in the December quarter.

The Australian dollar was trading at US70.89¢ around 4.30pm AEDT.

Iron ore and copper miners added to gains made earlier in the week. BHP rose 1.8 per cent, Rio Tinto was up 1.43 per cent, and, after early falls, Fortescue closed flat.

As global investors step away from the US dollar due to political instability and other worries, prices have surged for gold and other safe haven metals. Gold’s price topped $US5000 ($7103) per ounce this week for the first time, and it added another 4.3 per cent to settle at $US5340.20. Gold’s glow is underpinning miners like Northern Star – it surged 3.11 per cent – and Evolution Mining, which rose 2.41 per cent.

Financial stocks fell, with Commonwealth Bank, down 1.13 per cent, and Westpac, down 0.95 per cent, leading the charge. ANZ Bank added 0.11 per cent and National Australia Bank advanced 0.44 per cent.

Overnight, the S&P 500 inched down by less than 0.1 per cent from its all-time high as the Fed pressed pause. The Dow Jones Industrial Average added 12 points, or less than 0.1 per cent, and the Nasdaq composite rose 0.2 per cent.

Tesla, Microsoft and Meta released results after the closing bell.

Tesla said it would invest $US2 billion in chief executive Elon Musk’s artificial intelligence company xAI – and that production plans for its Cybercab robotaxi and Semi trucks were on track for this year.

Musk has pivoted Tesla from an electric vehicle maker to an AI company, with much of the company’s $US1.5 trillion valuation hanging on that bet. The investment in xAI is expected to bolster his autonomous driving and robotics ambitions.

Tesla’s shares were up about 3.4 per cent in extended trading.

The Austin, Texas-based company reported revenue of $US24.9 billion for the three months ended December 31, beating analysts’ average estimate of $US24.79 billion, according to data compiled by LSEG.

Microsoft’s spending surged to a record high and cloud sales growth slowed, sending the shares down amid investor concerns that it could take longer than expected for the company’s AI investments to pay off. Its shares fell about 5 per cent in extended trading after closing.

Meta’s robust advertising business, which boosted its current-quarter outlook above estimates, is making it possible for the company to invest at record levels on artificial intelligence this year.

The owner of Facebook said first-quarter sales will be $US53.5 billion to $US56.5 billion, beating the $US51.3 billion average analyst estimate. Meta shares gained as much as 4.9 per cent.

In the bond market, Treasury yields held relatively steady following the Fed’s widely expected move to hold its main interest rate steady.

The Fed’s chair, Jerome Powell, said that interest rates look to be “in a good place” at the moment, giving the central bank time to wait and see how things progress. In the meantime, “the economy has once again surprised us with its strength”, he said.

The yield on the 10-year Treasury remained at 4.24 per cent, where it was late on Tuesday.

With AP, Bloomberg

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