ASX closes higher despite slump in banks; oil price lifts energy stocks

Australia’s sharemarket closed in the green on Wednesday after a late flourish as a rise in the oil price helped to fuel a rally in energy shares, outweighing a drop in the country’s banking giants.

The S&P/ASX200 closed 12.1 points or 0.1 per cent higher at 8820.60 after Wall Street edged back from its record high following a mixed start to the latest profit reporting season for big US companies.

Financials were the biggest weight on the bourse, reversing Tuesday’s gains, with Commonwealth Bank (down 1.3 per cent), Westpac (down 0.6 per cent), National Australia Bank (down 1.1 per cent) and ANZ Bank (down 0.3 per cent) losing ground. Macquarie Group bucked the trend, rising 0.8 per cent.

The drop in local banking shares came after US banking giant JP Morgan disappointed the market with its outlook overnight as American banks push back against a suggestion from US President Donald Trump to cap credit card interest rates at 10 per cent.

“JP Morgan’s guidance failed to meet expectations, while commentary about how the Trump administration’s proposed cap on credit card rates may impact future profits also weighed on the bank’s share price and broader financial sector,” Capital.com senior market analyst Kyle Rodda said on Wednesday.

The energy sector was the strongest performer on the ASX, with oil and gas giant Woodside up 2.6 per cent and Santos gaining 2.8 per cent after a strong rise in oil prices in recent days.

West Texas Intermediate futures rose by 2.8 per cent to settle at $US61.15 a barrel on Tuesday (US time), reaching the highest level in over two months. Trump said in Detroit that he thinks it’s a good idea if US citizens leave Iran and reiterated an earlier pledge that “help is on its way” to Iranian protesters amid the biggest challenge to the regime in the Islamic republic since the 1979 Iranian Revolution.

Traders are watching the unrest in Iran and possible American intervention, which could threaten the country’s oil output of roughly 3.3 million barrels a day.

Mining shares were also mostly higher, with the iron ore giants BHP (up 1.1 per cent) and Rio Tinto (up 0.8 per cent) climbing, while Fortescue gained 0.4 per cent.

The supermarket giants Woolworths (down 0.1 per cent) and Coles (down 0.6 per cent) both closed the day lower, reversing earlier gains, while pub owner and liquor retailer Endeavour Group rose 2.2 per cent after releasing an update on Tuesday that showed significant discounting at its outlets during the festive season.

BlueScope Steel shares fell 0.3 per cent even after it said it would pay shareholders a special dividend. It last week rejected a $13 billion offer for the company from billionaire Kerry Stokes’ business conglomerate and its US bidding partner.

On Tuesday in the US, the S&P 500 fell 0.2 per cent from its all-time high set the day before. The Dow Jones Industrial Average dropped 398 points, or 0.8 per cent, from its own record, while the Nasdaq composite slipped 0.1 per cent.

US companies are under pressure to deliver strong growth in profits for the last three months of 2025 to justify the record-breaking runs for their stock prices. Analysts expect companies in the S&P 500 to deliver overall earnings per share that are 8.3 per cent higher than a year earlier, according to FactSet.

JPMorgan Chase helped kick off the latest reporting season by delivering weaker profit and revenue than analysts expected. Its stock fell 4.1 per cent and was one of the heaviest weights on the market, but the shortfall may have been because some analysts hadn’t updated their estimates to account for the earnings hit resulting from the bank’s purchase of the Apple Card credit card portfolio.

CEO Jamie Dimon sounded relatively optimistic about the US economy, saying “consumers continue to spend, and businesses generally remain healthy”.

Delta Air Lines lost 2.6 per cent despite reporting a stronger profit for the end of 2025 than analysts expected. Its revenue came up short of Wall Street’s expectations, as did the midpoint of its forecasted range for profit in 2026.

Chipotle Mexican Grill sank 3 per cent after saying it’s looking for a new chief marketing officer, a move that surprised analysts.

On the winning side of Wall Street were several healthcare companies after they raised their financial forecasts at an industry conference with analysts.

Moderna jumped 15.4 per cent for the biggest gain in the S&P 500 after saying it expects to report revenue for 2025 that’s above the midpoint of the range it had forecast in November. It also offered updates on several products, including a seasonal flu vaccine that could see potential approvals beginning later this year.

Revvity rose 5.5 per cent after the life sciences company said it expects to report profit for 2025 above the top end of the forecasted range it had earlier given. Its forecast for revenue in the fourth quarter also topped analysts’ expectations.

In the bond market, yields eased a bit after a highly anticipated update on inflation came in close to economists’ expectations. The data strengthened expectations that the Federal Reserve may be able to cut its main interest rate at least twice in 2026 to shore up the job market.

Lower interest rates could make borrowing cheaper for US households and boost prices for investments, but they could also worsen inflation at the same time. Tuesday’s report showed that US consumers paid prices last month for fuel, food and other costs of living that were 2.7 per cent higher overall than a year earlier. That’s a touch worse than economists expected and above the Fed’s 2 per cent target for inflation.

with AAP, AP, Bloomberg

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