Australian stocks gain ground – up 26 points, to 7,530 at close on 8/2

Australian stocks gain ground – up 26 points, to 7,530 at close on 8/2

Australian stocks gain ground – up 26 points, to 7,530 at close on 8/2

The Australian share market has finished higher after US Federal Reserve chairman Jerome Powell doubled down on last week’s somewhat dovish rhetoric.

The benchmark S&P/ASX200 index on Wednesday closed up 26 points, or 0.35 per cent, to 7,530.1, while the broader All Ordinaries finished 27.4 points higher, or 0.36 per cent, at 7,740.5.

“We had a pretty good lead in from the States, and it really was about those comments from Powell or picking out some comments, and ignoring others,” said Peter Dragicevich, APAC currency strategist with Corpay Cross-Border Solutions.

The Fed chairman reiterated in a question-and-answer session at the Economics Club of Washington overnight that he expected significant declines in inflation this year, while also warning that the central bank might need to raise rates higher than current forecasts.

Some saw it as significant that the Fed chairman didn’t adopt a more aggressive stance, particularly in light of Friday’s stellar US jobs report.

“The market can be a bit fickle and short-sighted when it comes to the Fed’s comments,” Mr Dragicevich told AAP.

“Normally markets can’t sit still for long – when they think a peak (in rate hikes) is in, they start thinking of a (rate) cutting cycle.”

But Mr Dragicevich said he expected that central banks would keep rates higher for longer, rather than giving inflation a chance to rebound by cutting them prematurely, as he said happened in the 1970s.

Financials were the biggest gainers on Wednesday, climbing 0.9 per cent as a whole.

Suncorp added 4.6 per cent to $13.04 as the insurer hiked its dividend after its half-year net profit rose 44.3 per cent to $560 million.

Macquarie rose 2.6 per cent to a fresh nine-month high of $195.23 and the big retail banks mostly gained ground, led by NAB climbing 1.0 per cent to $32.06.

Westpac rose 0.7 per cent to $23.90 and ANZ added 0.5 per cent to $25.79, while CBA was flat at $110.32.

In the heavyweight materials sector, Fortescue Metals was up 2.0 per cent to $22.48 as its joint venture Ivindo Iron signed an agreement to begin mining in the second half of this year in Gabon in central Africa.

“Geological mapping and sampling programs have confirmed our initial thoughts that this new West African iron ore hub may well one day prove to be the largest in the world,” Fortescue founder and executive chairman Andrew Forrest said.

Rio Tinto was up 1.1 per cent to $124.19 while BHP was more subdued, edging 0.2 per cent to $48.10 after suspending Western Australia iron ore operations for 24 hours following a fatal accident at one of its railyards in Port Hedland.

Elsewhere in the sector, Goldminer Newcrest was up 2.6 per cent to an eight-month high of $25.60 amid enthusiasm for its possible acquisition by Newmont.

Woodside gained 0.6 per cent to $36.39 as Brent crude prices rose to a one-week high of $US84 a barrel following earthquake-related disruptions to Turkish oil exports.

Boral soared 12.8 per cent to a nearly one-year high of $3.97 after the building products company reported its underlying net profit after tax had risen 53 per cent, in its first set of financial results under new CEO Vik Bansal.

The US dollar slid against other currencies after Powell’s comments.

The Australian dollar was buying 69.60 US cents, from 69.28 US cents at Tuesday’s ASX close.

ON THE ASX:

* The benchmark S&P/ASX200 index ended Wednesday up 26 points, or 0.35 per cent, at 7,530.1.

* The broader All Ordinaries fell 27.4 points, or 0.36 per cent, to 7,740.5.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 69.67 US cents, from 69.28 US cents at Tuesday’s ASX close

* 91.35 Japanese yen, from 91.68 Japanese yen

* 64.91 Euro cents, from 64.54 Euro cents

* 57.880 British pence, from 57.51 pence

* 110.16 NZ cents, from 109.62 NZ cents.

 

Derek Rose
(Australian Associated Press)



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