Source : THE AGE NEWS
By Damian Troise and Alex Veiga
The Australian sharemarket was slightly lower in afternoon trading, after a mixed night on global market and as new figures showed a surge in employment last month.
The S&P/ASX 200 was down 6.3 points, or 0.1 per cent lower at 11.45 AM on Thursday, with six of 11 industry sectors in negative territory.
Wall Street had a choppy session on Wednesday. Credit: Reuters
As investors await a potential interest rate cut next week, the ABS on Thursday said the unemployment rate was unchanged at 4.1 per cent in April, while the number of employed people shot up by 89,000 in the month, beating the market’s expectations. The number of unemployed people also increased by 6000 in the month.
The Australian dollar strengthened slightly after the result, and was trading at US64.43¢ at 11.52 AEST. Economists believe the strength of the labour market will be a key influence on how deeply the Reserve Bank cuts interest rates, with markets tipping a likely cut next week.
Senior APAC economist for Capital Economics, Abhijit Surya, said the ABS data suggested the labour market remained “very tight.” While he tipped a rate cut from the RBA next week, the research house argues the RBA will only cut the cash rate to a low point of 3.6 per cent this cycle – which is higher than what most economists expect.
“With the labour market going from strength to strength, we’re more convinced than ever that the RBA will be reluctant to cut rates aggressively,” Surya said.
In corporate news, Treasury Wine Estates has announced chief executive Tim Ford will step down later this year, ending a five-year stint as chief executive. He will be replaced by Sam Fischer, the chief executive of New Zealand drinks producer Lion. Treasury shares fell 4.7 per cent by late morning.
The big four banks were all higher. Westpac rose 0.5 per cent, NAB added 0.8 per cent, CBA rose 0.7 per cent and ANZ rose 0.5 per cent.
Insurance Australia Group shares rose 4 per cent after it announced it was buying the Royal Automobile Club of Western Australia’s insurance business and entering into a distribution and brand licensing agreement for a total of $1.35 billion.
A slide in iron ore prices sent big miners lower. Fortescue fell 0.8 per cent while BHP and Rio Tinto each lost 0.9 per cent.
Australian property giant Lendlease is in the late stages of inking a 50/50 joint venture with King Charles’ property company, The Crown Estate, in the United Kingdom. The $3.8 billion ASX-listed property developer responded to media speculation on Thursday saying it was in negotiations with the King’s company over six projects that are part of its UK development portfolio.
The Crown Estate is one of the UK’s largest property managers controlling about £15.5 billion ($32 billion) of land, including Ascot Racecourse. The Crown Estate is a collection of lands and holdings in the UK belonging to the reigning British monarch that sit under a for-profit corporation managed by an independent board and chair. Lendlease shares rose by 2.4 per cent.
On Wall Street, a choppy day of trading ended with a mixed finish for stock indexes on Wednesday, as gains by several big technology stocks helped temper losses.
The S&P 500 edged up 0.1 per cent after wavering between small gains and losses much of the day. Most of the stocks in the index lost ground, but solid gains for several heavyweight technology companies like Nvidia helped counter a decline in healthcare and other sectors.
The Dow Jones slipped 0.2 per cent, while the Nasdaq composite rose 0.7 per cent.
Super Micro Computer surged 15.7 per cent after signing a partnership agreement with Saudi Arabian data centre company DataVolt. Advanced Micro Devices gained 4.7 per cent after announcing a $US6 billion ($9.3 billion) stock buyback program.
Nvidia rose 4.2 per cent and Google parent Alphabet added 3.7 per cent.
Other big gainers included eToro Group, a retail trading platform for stocks and cryptocurrency. It rose 28.8 per cent in its first day of trading.
The market has been relatively steady since its surge on Monday, which came after the US and China entered a 90-day pause in their trade war. The market gained some more ground on Tuesday after the government reported that inflation unexpectedly cooled across the country in April. Additional updates on inflation and retail sales are expected on Thursday.
The benchmark S&P 500 index, which sits at the centre many 401(k) accounts, has erased all its losses since President Donald Trump escalated his global trade war in early April. It has now also erased its losses for the year and is back to within 4.1 per cent of its all-time high set in February.
“The stockmarket’s rally has legs, as the trade negotiation with China was seemingly the toughest one on the docket,” said Rick Gardner, chief investment officer at RGA Investments.
Trump has delayed a large swath of his most severe tariffs against America’s trading partners, but some import taxes remain in place. Uncertainty over the path ahead continues to hang over businesses and consumers. The on-again-off-again nature of Trump’s trade policy has left companies reluctant to make plans about investment and hiring and consumers nervous about spending.
Businesses continue to trim or withdraw their financial forecasts as they face unpredictable trade policy and cautious consumers.
American Eagle fell 6.4 per cent after the retailer withdrew its financial outlook for the year citing “macro uncertainty.” General Motors, UPS, Kraft Heinz and JetBlue are among the many companies representing a wide range of industries that have warned about the impact of tariffs and a weakening economy.
Boeing shares gained 0.6 per cent after the White House announced that Qatar Airways had inked a $US96 billion plan to acquire as many as 210 Boeing 787 Dreamliner and 777X aircraft. The White House cast the purchase as the largest-ever widebody order and the largest-ever for the 787s.
More than 90 per cent of companies in the S&P 500 have reported earnings for their latest quarter. The majority of companies have reported better-than-expected earnings, but forecasts for earnings growth during the current quarter have been broadly cut in half for companies in the index.
The economy has already shown signs of slowing. It shrank 0.3 per cent during the first quarter amid a surge of imports as businesses and consumers tried to stock up amid tariffs and policy uncertainty.
Inflation remains a big concern. The latest data on consumer prices released on Tuesday showed that tariffs haven’t had much impact yet. But that could change as the impact of current tariffs make their way through supply chains and delayed tariffs potentially go into effect. Inflation has cooled to just above the Federal Reserve’s target of 2 per cent, but the threat of higher prices on goods because of import taxes has heightened worries about inflation heating up.
The US on Thursday will release its April report for inflation at the wholesale level, which is what companies are paying for goods. Economists expect an easing of inflation there.
AP
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