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On the losing end, IT stocks (down 4.8 per cent) pared back gains on the index as Xero shed 12.4 per cent and WiseTech lost 2.7 per cent. Xero’s losses came despite swinging from a loss to a $50 million profit as it missed consensus expectations.
Energy companies (down 0.9 per cent) were also weaker as Woodside lost 1.8 per cent and Santos shed 0.4 per cent following a drop in oil prices.
NAB (down 0.8 per cent) rallied in early trade but closed lower after it reported a $7.7 billion profit, which fell slightly shy of consensus expectations.
Gold producer Newmont (down 4.3 per cent), Resmed (down 3.6 per cent) and Fisher & Paykel Healthcare (down 2 per cent) were among the biggest large-cap advancers.
The lowdown
IG Australia market analyst Tony Sycamore said a late rally on Wall Street provided a tailwind for the ASX 200 following cooler US activity and employment data last week and a dovish Reserve Bank rate rise domestically.
“Leading the local index higher, heavyweight CSL gained,” he said, closing about 10 per cent above its low last week.
However, Sycamore said information technology companies were weaker following the earnings miss from Xero. “The IT sector snapped a six-day winning streak,” he said.
Weaker oil prices were also a drag on the local bourse, Sycamore said, on the back of a reaction to China’s soft trade data on Tuesday which inflamed concerns about global growth. “Crude oil is on track for its second consecutive weekly fall of more than 5 per cent,” he said, which weighed on heavyweight oil players.
Overnight on Wall Street, US stocks were largely stuck in place as Wall Street continues to recalibrate following its sharp recent swings.
The S&P 500 edged up by 4.4 points, or 0.1 per cent, to 4382.78 for a third straight day of quiet, mixed trading. Its movements have become much calmer after the index rallied to its best week of the year last week, which itself came after months of painful losses.
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Though the gain was slight, it was enough to extend the index’s winning streak to eight days. That ties its longest such winning streak since a nine-day run 19 years ago.
The Dow Jones slipped 0.1 per cent and the Nasdaq composite rose 0.1 per cent.
American Airlines, Delta Air Lines and United Airlines were towards the front of the market, and each rose more than 2 per cent as oil prices continued to drop and ease the pressure on fuel costs.
The latest US reporting season is winding down, and the majority of companies has been topping Wall Street’s forecasts. That’s usually the case, and it’s offered some support for the stock market. But the big driver for stock price movements of late has been what yields are doing in the bond market.
The 10-year Treasury yield fell to 4.51 per cent from 4.57 per cent late on Tuesday, helping to impart calm across financial markets.
A swift rise in the 10-year yield that began a couple of months ago knocked the S&P 500 down by more than 10 per cent from its peak for the year. The 10-year yield briefly topped 5 per cent to reach its highest level since 2007, as it caught up with the Federal Reserve’s main interest rate, which is above 5.25 per cent and at its highest level since 2001.
The Fed has jacked up rates in hopes of slowing the economy and hurting investment prices enough to put downward pressure on inflation and get it back to its 2 per cent goal.
Last week, though, investors took comments from Fed chair Jerome Powell to indicate the central bank’s rises to interest rates may be done. He said the recent jump in Treasury yields could substitute for further rises to rates if they remain persistent. That triggered a sharp easing in Treasury yields, which in turn helped stocks to rally.
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Now, investors are trying to handicap what may come next. A wide range of outcomes is still possible for the US economy, with the 10-year yield potentially easing as low as 3 per cent if it were to fall into a painful recession, according to Bank of America strategists led by Bruno Braizinha. At the same time, they said the 10-year yield could rise back above 5 per cent if the economy remains resilient.
A sharp drop in oil prices recently could take some pressure off inflation, which in turn could help the Fed feel more confident about holding rates steady instead of raising them further.
The price for a barrel of US crude oil is back to where it was in July, and it dropped another $US2.04 to settle at $US75.33. Brent crude, the international standard, fell $US2.07 to $US79.54.
Oil prices have been tumbling since topping $US90 a little more than a month ago. The latest Israel-Hamas war raised concerns about potential disruptions to supplies, which made prices volatile for a while. But worries about demand are still high given faltering economies around the world, particularly in China.
Stock indexes fell 0.2 per cent in Shanghai and 0.6 per cent in Hong Kong, joining modest losses across much of the rest of Asia. Stocks were higher in Europe.
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“Binance Australia is committed to providing users the best customer experience while following all relevant Australian laws,” said a spokesperson for the company, as it was revealed that sellers of high-risk financial betting products – described by an Australian judge as financial heroin hits – have collectively paid out more than $17 million in compensation to thousands of Australian clients after breaching new market rules.
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