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ASX lifts after Fed rates news

AUSTRALIAN STOCK EXCHANGE
Australian equities lifted slightly on Thursday. Picture: NCA NewsWire / Jeremy Piper

The sharemarket notched a ‘tepid bounce’ on Thursday as positive half-year results from NAB lifted the banks and investors digested rates guidance from the US Federal Reserve.

The benchmark ASX 200 edged up 0.23 per cent, or 17.1 points, to close at 7,587, while the broader All Ordinaries index lifted 0.22 per cent.

Technology stocks crept up 0.12 per cent, or 3.6 points, to 2,972.4.

The ASX200 followed a rise in US equity futures, which rebounded following Thursday morning’s update from US Fed chairman Jerome Powell on the trajectory of interest rates in the world’s largest economy.

Mr Powell kept rates unchanged and said another rate hike was “unlikely”.

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IG market analyst Tony Sycamore said ruling out the “tail risk” of a hike had been well-received by the market.

“The key takeaway there is after the run of hotter inflation data we’ve seen this year, there was starting to be some speculation, not only that rate cuts were being pared back, but that potentially the next move from the Fed could be a tightening,” he said.

Federal Reserve Chair Jerome Powell Holds Press Conference On Interest Rates
Federal Reserve Bank Chair Jerome Powell announces interest rates will remain unchanged during a news conference at the bank's William McChesney Martin building on May 1, 2024 in Washington, DC. Picture: Chip Somodevilla / Getty Images via AFP)

“But the base case of the Fed is they will need to keep rates higher for longer, but they are not looking to hike rates.

“It seemed Mr Powell’s comments were more dovish than the actual statement and that saw US equity futures rebound.

“They are trading up about 0.5 per cent and then the ASX200 has followed the lead of those futures markets and that has absolutely given the ASX200 a bit of relief today.”

Six of 11 industry sectors ended in the green, led by IT stocks with a near 1 per cent gain.

Discretionary, energy, utilities, telecommunications and staples all ended in the red, with staples recording a sharp 2.46 per cent fall.

Retail giant Woolworths tumbled 4.15 per cent to $30.50 a share after reporting lacklustre March quarter results.

Sales at the supermarket behemoth’s Australian Food division lifted 1.5 per cent to $12.57bn but CEO Brad Banducci acknowledged the business had struggled through a “challenging quarter”.

Coles fell 1.89 per cent to $16.09.

NAB CUSTOMERS
NAB, one of Australia’s ‘big four’ banks, released its half-year results on Thursday. Picture: NCA NewsWire / Glenn Campbell

But positive sentiment towards NAB’s half-year results, which showed a $3.49bn profit, lifted the big banks.

“The market liked what it saw initially, NAB was up about 4 per cent but it has pared back those gains,” Mr Sycamore said.

“I think the result was generally as the market was looking for.”

NAB closed up 1.45 per cent to $34.28 a share, while Commonwealth Bank lifted 0.95 per cent to $115.

ANZ rose 0.53 per cent to $28.23 and Westpac lifted nearly 1 per cent to $26.03.

In corporate news, iron ore giant Rio Tinto is keeping mum about any possibility of a play for rival Anglo American after BHP lit up the mining world with its $60bn bid last week.

Rio chairman Dominic Barton, speaking at the company’s AGM in Brisbane, told shareholders he would not “speculate” about mergers and acquisitions.

The top gainer on the ASX200 was digital property exchange business Pexa Group, which soared 11 per cent to $13.58 on the announcement UK bank NatWest would extend its use of Pexa’s platform.

The largest laggard was automotive business Bapcor Limited, which collapsed 23.86 per cent to $4.40 on a disappointing trading update.

The Aussie dollar gained 0.3 per cent against the Greenback to buy US65.4c.