Source : THE AGE NEWS
By Nick Newling
The Australian sharemarket has seesawed this morning after Wall Street ended a choppy day higher. The US Federal Reserve left its main interest rate alone, as was widely expected, but also warned about rising risks for the US economy.
The S&P/ASX 200 rose by 1.5 points, or 0.02 per cent, to 8179.8, with three of 11 sectors in the red by 12.00pm AEST. Financials and energy took the biggest hits in this morning’s trade, falling by 0.9 per cent and 0.7 per cent respectively.
The S&P 500 rose 0.4 per cent. The index is coming off a two-day losing streak that had snapped its nine-day winning run. The Dow Jones rose 0.7 per cent, and the Nasdaq composite added 0.3 per cent. Fed chair Jerome Powell said the central bank has time to wait before making any potential moves on rates, but he warned that sustained tariffs could both weaken the economy and trigger higher inflation.
Fed chair Jerome Powell soothed investors.Credit: Bloomberg
Most major banks retreated with Westpac down 1.7 per cent as it trades ex-dividend. Suncorp lost 2.2 per cent after a trading update. ANZ was down 2.7 per cent after reporting a flat profit, followed by CBA (down 0.6 per cent), and Macquarie (down 0.8 per cent). After falling at open, NAB had recovered, growing by 1 per cent.
ANZ reported cash profits of $3.6 billion, flat on the same period a year earlier, in the last results for outgoing chief executive Shayne Elliott before he is replaced by Nuno Matos. Compared with September half, cash profits bounced by 12 per cent.
Elliott said the bank made record revenues in the half, as Suncorp bank’s earnings were included in ANZ’s, and it had growth home loans at 3 per cent during the period. Charges for impaired loans fell sharply compared with the September half, from $336 million to $145 million.
The bank will pay a dividend of 83c, also flat compared with the first half of last year. The dividend will be franked at 70 per cent.
Mining stocks are mixed. BHP was 0.4 per cent lower, Fortescue lost 0.5 per cent and Rio Tinto added 0.3 per cent.
Among consumer stocks, JB Hi-Fi fell by 1 per cent, extending losses from Wednesday. Wesfarmers was down 1.1 per cent, but Aristocrat rebounded from a poor morning, lifting 0.8 per cent. Coles was up 1.4 per cent, while Woolworths and A2 Milk both advanced 0.8 per cent.
Toll roads giant Transurban has announced it will cut 300 jobs after a review of its business. Transurban operates nearly all of Australia’s 21 toll roads, including Melbourne’s CityLink and Sydney’s WestConnex. Transurban shares are 1 per cent higher.
The strongest performing stocks of the morning were explosives firm Orica (up 7 per cent), radiology software company Pro Medicus (up 5 per cent), and pharmacy franchiser Sigma (up 3 per cent).
On Wall Street, indexes had been modestly higher earlier in the morning, with the Dow briefly up 400 points, on hopes that the United States and China may be making the first moves toward a possible trade deal that could protect the global economy. The world’s two largest economies have been placing ever-increasing tariffs on products coming from each other in an escalating trade war, and the fear is that they could cause a recession unless they allow trade to move more freely.
The announcement for high-level talks between US and Chinese officials this weekend in Switzerland helped raise optimism, but some of that washed away after President Donald Trump said he would not reduce his 145 per cent tariffs on Chinese goods as a condition for negotiations. China has made the de-escalation of the tariffs a requirement for trade negotiations, which the meetings are supposed to help establish.
Such on-and-off uncertainty surrounding tariffs has helped create sharp swings within the US economy, including a rush of imports earlier this year to beat possible tariffs. Underneath those swings, as well as surveys showing US households are growing much more pessimistic about the future, the Fed said it continues to see the economy running “at a solid pace” at the moment.
Powell said that gives the central bank time to wait before making any potential moves on interest rates, even if Trump has been lobbying for quicker cuts to juice the economy.
Credit:
“There’s so much that we don’t know,” Powell said. So like the rest of Wall Street and the world, the Fed is waiting to see what will actually end up happening in Trump’s trade war and whether his proposed tariffs, which were much stiffer than expected, will actually hit.
That’s particularly the case after the trade war seems to have entered “a new phase,” Powell said, where the United States is looking to conduct more talks on trade with other countries.
Elsewhere, big US companies continue to produce fatter profits for the start of 2025 than analysts expected.
Disney soared 10.8 per cent after easily beating analysts’ profit targets, raising its profit forecast and adding more than a million streaming subscribers.
Companies, though, are also continuing to warn about how uncertainty in the economy is making it more difficult for them to forecast their own finances.
Shares in Google’s parent Alphabet slumped 8.8 per cent as Apple’s company’s senior vice president of services Eddy Cue said the company is “actively looking at” reshaping the Safari web browser on its devices to focus on AI-powered search engines. Cue made the disclosure Wednesday during his testimony in the US Justice Department’s lawsuit against Alphabet. Shares of the iPhone maker traded down 1.1 per cent.
