ASX ends the week in the green, buoyed by tech share rally

Welcome to your recap of the trading day.

The numbers

The Australian sharemarket has ended the week in the green, lifted by technology, healthcare and consumer discretionary stocks, after Wall Street closed at a record.

The S&P/ASX 200 closed 41.5 points, or 0.5 per cent, higher at 8987.4. Eight of the market’s 11 sectors closed in positive territory.

The lifters

Clarity Pharmaceuticals finished at the top of the bourse, closing 19.3 per cent higher, followed by Eagers Automotive, which rose 15.3 per cent after completing a capital raising to fund an investment in a Canadian dealership group. DigiCo Infrastructure surged 11.7 per cent on stronger earnings guidance.

Technology was the best-performing sector of the day, jumping 1.6 per cent following a rise in US tech shares overnight. Accounting software group Xero gained 1.7 per cent; tracking business Life360 gained 3.1 per cent; and WiseTech closed 0.3 per cent higher.

Healthcare was one of the strongest performing sectors, helped by a 3 per cent rise in ResMed and gains in Ramsay Healthcare (up 1.7 per cent). Industry giant CSL was 0.8 per cent higher.

The major four banks all moved higher: ANZ led the way for the big four banks with a gain of 0.8 per cent, while Commonwealth Bank and Westpac lifted 0.3 per cent. NAB rose 0.4 per cent.

Consumer discretionary shares rose 1 per cent, helped by the surge in Eagers Automotive (up 15.3 per cent).

Mining giants moved higher, though BHP’s gain of 0.3 per cent was lower than its peers, after a week in which it has emerged that China is playing hardball with BHP in its negotiations over iron ore exports. Rival iron ore miners Rio Tinto (up 0.8 per cent) and Fortescue (up 0.5 per cent) moved higher.

The laggards

Telstra closed 0.6 per cent lower after being issued an $18 million fine after the Federal Court ruled it had misled nearly 9000 broadband customers by quietly cutting their internet upload speeds in 2020.

Energy shares were mostly lower. Santos fell 2.2 per cent and Yancoal slipped 1.5 per cent. Woodside was virtually flat. Utilities also fell. Origin Energy declined 1.5 per cent and AGL fell 0.9 per cent.

The lowdown

Optimism about future US interest rate cuts lifted global sharemarkets this week, despite the partial US government shutdown. The Australian sharemarket finished the week 2.3 per cent higher than it began.

“While there is literally a wall of worry out there, investors appear to be taking comfort from still solid US economic and profit growth, signs of improving growth in Australia and the prospect for still more rate cuts smoothing things over,” AMP chief economist Shane Oliver said.

The Reserve Bank kept rates on hold this week and struck a more hawkish tone, suggesting there is a “high risk” that interest rate cuts could be delayed until next year, Oliver said.

“It adds to the uncertainty regarding when and by how much rates will fall any further,” he said.

“November is a very close call and there is a high risk we may be at or nearer the bottom on rates than we thought.”

The Australian dollar was trading at US66¢ shortly after 5pm AEST.

On Thursday night, US stocks edged higher to reset record highs on Thursday as technology stocks keep rising and as Wall Street keeps ignoring the shutdown of the US government.

The S&P 500 rose 0.1 per cent; the Dow Jones added 0.2 per cent; and the Nasdaq composite climbed 0.4 per cent. All three indexes set record highs. Technology stocks helped lead the way after OpenAI announced partnerships with South Korean companies for its Stargate artificial intelligence infrastructure project.

Typically on Thursdays on Wall Street, investors react to the latest weekly tally of US workers applying for unemployment benefits but DC’s shutdown means this week’s report on jobless claims has been delayed. An even more consequential report, Friday’s monthly tally of jobs created and destroyed across the economy, is also unlikely to arrive on schedule.

That increases uncertainty when much on Wall Street is riding on investors’ hopes that the job market will slow by a precise amount: enough to convince the Federal Reserve to keep cutting interest rates, but not by so much that it leads to a recession.

“The Fed has been on record that they are very data dependent and the lack of data from public sources is likely to be problematic,” said Wells Fargo Investment Institute head of global fixed-income strategy Brian Rehling.

So far, the US stock market has looked past the delays of such data. Shutdowns of the US government have tended not to hurt the economy or the stock market much, and the thinking is that this one could be similar, even if US President Donald Trump has threatened large-scale firings of federal workers this time around.

That left corporate announcements as the main drivers of trading on Thursday.

Stocks in the chip and artificial intelligence industries climbed after OpenAI announced partnerships with South Korean companies for Stargate, a $US500 billion ($758 billion) project aimed at building AI infrastructure.

The announcement also sent ripples around the world. On Wall Street, Advanced Micro Devices climbed 3.5 per cent and Broadcom gained 1.4 per cent. The US-traded stock of Taiwan Semiconductor Manufacturing Co, a major maker of chips, slipped by 0.1 per cent.

Occidental Petroleum fell 7.3 per cent after it agreed to sell its chemical business, OxyChem, to Berkshire Hathaway for $US9.7 billion in cash. It could be the final big purchase for Berkshire Hathaway with famed investor Warren Buffett as its CEO.

AP, Bloomberg

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