Source : THE AGE NEWS
The Australian sharemarket extended its rally at lunchtime, tracking gains on Wall Street, where investors pivoted back from artificial-intelligence weariness to focus on the upsides of the AI boom.
A flurry of corporate news also buoyed local investor sentiment: Woolworths, the nation’s biggest supermarket chain, rallied after raising its interim dividend by 15.4 per cent and saying trading has been strong at its Australian supermarkets. Software giant WiseTech Global advanced after saying it will slash almost a third of its staff as it turns to AI for its software development. And Fortescue Metals paced gains in mining stocks after reporting record iron ore shipments.
The S&P/ASX 200 climbed 87.70 points, or 1 per cent, to 9110 as of 12.14pm AEDT, with a surge in consumer staples and tech stocks leading the gains. The market strength comes after a flat finish on Tuesday. The Australian dollar was trading at US70.61¢ at 11.23am AEDT.
In the AI and earnings excitement, investors seemed to shrug off the latest inflation figures from the Australian Bureau of Statistics, which came in higher than forecast, further strengthening the case for another interest rate rise by the Reserve Bank. Before the latest figures, markets had been predicting a hike as soon as the central bank’s May meeting.
The ABS said annual inflation was steady at 3.8 per cent through the 12 months to the end of January, higher than the 3.7 per cent predicted by economists. Underlying inflation, closely watched by the RBA, was up by 0.3 per cent in January, which took the annual rate up slightly to 3.4 per cent.
Woolworths shares soared 11.9 per cent above $35, the highest since August 2024, after revealing solid half-year results. The supermarket giant’s sales lifted 3.4 per cent to $37.1 billion, helping it push operating earnings up 14.4 per cent to $1.66 billion. Australian food sales from its supermarkets gained 3.6 per cent to $1.5 billion. The company announced a fully franked interim dividend of 45 cents per share.
WiseTech shares jumped 9.1 per cent after the logistics software maker said it will cut roughly 2000 staff over the next two years as chief executive Zubin Appoo bets the company’s future on artificial intelligence. The restructure comes amid a steep sell-off across traditional software makers from Atlassian to Adobe, driven by fears that AI-powered coding tools will allow upstarts to rapidly replicate services that took incumbents years to build.
“The era of manually writing code as the core act of engineering is over,” Appoo declared, calling AI “the most significant shift in decades” for software development.
Other tech stocks also advanced, tracking their peers’ gains in the US, with accounting software maker Xero up 3.7 per cent, AI data centre operator Next DC rising 4.9 per cent and family tracking app Life360 gaining 7.1 per cent.
In the mining sector, Fortescue shares rose 2.4 per cent after the iron ore miner said shipments of the key steelmaking ingredient reached their highest level ever at 100.2 million tonnes in the December half. The company reported a net profit of $US1.9 billion ($2.7 billion) and declared a fully franked interim dividend of 62c per share, 24 per cent higher than the previous year.
Fortescue Metals boss Dino Otranto said the company’s decarbonisation push was lowering its operating costs. “The more diesel we eliminate, the less exposure we have to price volatility, and the stronger and more predictable our margins become,” he said.
Other miners also advanced. BHP gained 1.8 per cent, having hit a fresh record high above $56 in morning trade. Rio Tinto added 1.4 per cent and gold miners Northern Star Resources and Evolution Mining gained 2.1 per cent and 3.5 per cent, respectively.
The key banking sector, which makes up a third of the ASX, was also stronger. CBA, the nation’s biggest lender, rose 0.7 per cent. National Australia Bank and Westpac both added 1.4 per cent, and ANZ rose 1 per cent.
Shares in gaming giant Tabcorp soared as much as 20 per cent to a high of $1.02, after it reported underlying earnings rose 19 per cent to $110 million in the December half. Cost cuts boosted its bottom line despite revenue increasing only slightly to $1.34 billion.
On Wall Street, the S&P 500 climbed 0.8 per cent overnight and recovered nearly three-quarters of its sharp drop from the day before. The Dow Jones added 0.8 per cent, and the Nasdaq composite gained 1 per cent.
The gains came after investors piled back into AI-related stocks ahead of Nvidia’s results, scheduled to be published after Wednesday’s closing bell in New York (Thursday morning AEDT).
Advanced Micro Devices helped lead the US market and rallied 8.8 per cent after announcing a multiyear deal where it will supply chips to Meta Platforms to help power its AI ambitions. Under the agreement, Meta also got the right to buy up to 160 million shares of AMD stock for 1 US cent each, depending in part on how many chips Meta ultimately buys. The series of transactions will be worth “double-digit billions” of dollars per gigawatt, according to AMD boss Lisa Su.
It’s a reminder of the excitement that built in recent years about the billions of dollars pouring into AI. It also helped produce a sharp turnaround for the market from the prior day, when worries about the potential downsides of AI shook Wall Street, particularly companies and industries that investors fear could be made obsolete.
IBM rose 2.7 per cent to recover some of its 13.1 per cent drop from Monday, which was its worst since 2000. Nvidia was up 0.7 per cent.
Outside of AI worries, big US companies continued to report mostly better profits than analysts expected. Keysight Technologies rallied 23.1 per cent for the biggest gain in the S&P 500 after topping analysts’ expectations for profit in the latest quarter.
With AP, Bloomberg
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