Source : THE AGE NEWS
The Australian sharemarket has lifted as investors drove a rally in banks, technology and healthcare stocks following a positive lead from Wall Street.
The S&P/ASX200 was up 62.2 points, or 0.8 per cent, to 8030.4 as at 12.10pm AEST. Nine of the 11 industry sectors were in positive territory, with gains led by tech, healthcare and energy stocks. When the ASX last traded on Thursday, before Friday’s Anzac Day public holiday, it rose 0.6 per cent. The Australian dollar was trading slightly lower at US63.83¢.
Healthcare and technology shares rallied on Monday, pushing the ASX higher.Credit: Getty Images
Travel agency Flight Centre on Monday downgraded its 2025 profit guidance, and announced an on-market share buy-back of up to $200 million. The company, which was founded in 1982, cited volatile trading conditions in the US as a major reason behind the downgrade. Flight Centre shares dropped during the early trade, but were up 1 per cent shortly after midday.
The tech sector was firmly in the green at lunchtime after a strong performance from tech shares on Wall Street last week, with accounting software company Xero adding 2.2 per cent. Embattled tech company WiseTech Global added 0.5 per cent, while TechnologyOne saw a 2.6 per cent bump.
The miners had a mixed start to the week, with market heavyweight BHP shedding 1.1 per cent. Gold miners Fortescue (down 0.6 per cent) and Newmont (down 2 per cent) both fell. Some bright spots came from packaging business Amcor, which rose 0.7 per cent, and James Hardie Industries, which added 1.6 per cent.
Flight Centre downgraded its profit guidance on Monday morning. Credit: Dan Peled
The big four banks were all in positive territory shortly after midday, with NAB climbing by 1.8 per cent. ANZ added 2 per cent, and Westpac added 1.7 per cent. Commonwealth Bank – the nation’s biggest lender – was trading flat.
Real estate listings business Domain, which is majority owned by this masthead’s owner, rose 0.6 per cent after it said it had extended a period of exclusivity with Co-Star, which is looking to buy Domain.
A key event for markets this week will be Wednesday’s release of the March quarter consumer price index, which economists expect will show inflation was in the Reserve Bank’s 2 to 3 per cent target band. Investors are betting the RBA will cut interest rates at its next meeting on May 20.
On Friday in the US, worries about the economic fallout from tariffs drove US consumer sentiment to one of its lowest readings on record while long-term inflation expectations climbed to the highest since 1991.
A surge in megacaps sent the S&P 500 above 5,500 points, with the gauge notching its longest advance since January, while bonds and the US dollar rose. Tesla jumped 9.8 per cent while Alphabet climbed on solid results. Equities briefly lost steam as Trump suggested another delay to reciprocal tariffs was unlikely, and he wouldn’t drop levies on China without “something substantial” in return.
“Markets have staged an impressive recovery,” said Mark Hackett at Nationwide. “While fears of a 2008- or 2020-style crisis are fading, the road back to record highs won’t be easy. Markets are showing resilience, but still face the same persistent challenges, including tariff uncertainty and signs of an economic slowdown.”
President Trump’s administration has drafted a framework to handle negotiations with trading partners rushing to secure deals to avert tariff hikes, according to people familiar with the matter.
As profit margins remain close to record levels, Corporate America has some room to absorb costs from higher tariffs. However, the track record of S&P 500 companies over the past two decades suggests their ability to withstand additional levies is fragile, at least by one measure.
Nearly all of the margin growth eked out from corporate sales on the gauge since 2004 has come from the booming technology sector, according to Bloomberg Intelligence. Removing the group, profitability barely rose.
“The tariff-induced slowdown in economic activity, as well as the higher costs, will crimp corporate profit growth,” said David Lefkowitz at UBS Global Wealth Management. “But the economy should rebound next year as businesses and consumers adjust to the tariffs, with an assist from Federal Reserve rate cuts and certainty on tax policy.”
Bank of America Corp. strategists led by Michael Hartnett warned that the conditions for sustained gains in US stocks and the dollar are missing.
The greenback is in the midst of a longer-term depreciation while the shift away from US assets has further to go, they noted. The trend would continue until the Federal Reserve starts cutting rates, the US reaches a trade deal with China and consumer spending stays resilient.
Foreign investors have sold $US63 billion ($98.6 billlion) of US equities since the start of March, Goldman Sachs Group Inc. strategists estimate, noting that the data from high-frequency fund flows suggest that European investors have been driving the selling, while other regions have continued to buy US stocks.
Forecasters anticipate the trade war will hit economic growth this year and next as tariffs push prices higher and put a dent in consumer spending.
The US economy is set to expand 1.4 per cent in 2025 and 1.5 per cent in 2026, according to the latest Bloomberg survey of economists, compared with 2 per cent and 1.9 per cent in last month’s poll. The median respondent now sees a 45 per cent chance of a downturn in the next 12 months, up from 30 per cent in March.
All up, the S&P 500 rose 0.7 per cent, the Nasdaq 100 rose 1.1 per cent and the Dow Jones Industrial Average was little changed.
