Australian shares have risen for a third straight session, supported by sustained optimism about the US Federal Reserve considering easing off on its aggressive rate-hike stance.
Key points:
- The ASX 200 has lost more than 6 per cent since the year began
- Overnight, all three major Wall Street indices closed higher
- The pan-European STOXX 600 index rose 0.3 per cent
Overnight, Wall Street finished strongly higher ahead of midterm elections that will decide the fate of US Congress, with data indicating that rapid rate hikes have helped cool down the economy, raising hopes of a slowdown in aggressive tightening.
Back home, the ASX 200 closed up 25 points, or 0.4 per cent, to 6,959.
By 4:44pm AEDT, the Australian dollar was fairly flat, at 64.48 US cents.
Eight out of the 11 sectors were higher.
Financials led gains on the benchmark, advancing 1 per cent, lifted by all the big four banks.
Westpac added 2 per cent, a day after posting slightly lower annual cash earnings, while NAB was up as much as 0.7 per cent, a day ahead of announcing its fiscal 2022 results.
Mining stocks were up 0.2 per cent, even as iron ore prices fell on China sticking to its COVID-19 restrictions.
However, sector majors BHP and Fortescue lost 0.3 per cent and 0.1 per cent, respectively.
James Hardie Industries slumped 13.7 per cent after the world’s biggest fibre cement maker slashed its earnings forecast for FY23, citing a decline in volumes across all three key regions.
It was the biggest loser in the benchmark, marking its worst intraday fall since March 2020.
Among the best performers were Mineral Resources (+5 per cent), A2 (+4 per cent) and Pilbara Minerals (+4.4 per cent).
Meanwhile, the Westpac-Melbourne Institute index of consumer sentiment slid 6.9 per cent in November from October, to levels last seen during the global financial crisis.
Rising interest rates and surging inflation has clouded the outlook for family finances and the economy, but actual spending has yet to follow.
Separately, the Reserve Bank of New Zealand’s (RBNZ) governor, Adrian Orr, was reappointed for another five-year term starting in late March next year.
The central bank is expected to release its review of monetary policy over the past five years on Thursday, along with a couple of independent reviews of its decisions.
On the oil markets, Brent crude was up, trading at $US97.45 a barrel, by 4:55pm AEDT.
Eyes turn to outcome of US midterm elections
On Monday, equity markets rose on rising risk appetite, driven by hopes the US economy is slowing enough to allow the Federal Reserve to ease its rate-hiking pace and the ongoing speculation that China may ease COVID-19 restrictions.
Markets looked past data showing that Chinese exports and imports unexpectedly contracted in October as China grappled with COVID-19 restrictions, and indications that a report on the consumer price index on Thursday will show stubbornly high inflation.
US stock indexes edged higher in choppy trading, with the focus on Tuesday’s midterm elections that will determine whether the Republicans are strong enough to take over Congress and underlining the Democrats’ difficult prospects.
While a divided Congress is typically viewed as good for markets, the hope that the US economy is losing enough momentum for the Fed to slow the pace of monetary tightening is pushing the dollar lower, said Joe Manimbo, senior market analyst at Convera in Washington.
“The market is really desperate for the Fed to pivot,” Mr Manimbo said.
“It will take anything it can get in terms of signs of a softening economy to hold out hope that a pivot might materialise sooner rather than later,” he said.
Slower inflation — on the heels of signs in Friday’s US employment report that the labour market is cooling — would be positive for risk appetite and negative, at least over the short term, for the dollar, Mr Manimbo said.
On Wall Street, the Dow Jones Industrial Average rose 1.3 per cent, the S&P 500 gained 1 per cent, and the Nasdaq Composite firmed 0.9 per cent.
Meanwhile, European shares closed on Monday at a more than seven-week high as a jump in travel and technology stocks helped outweigh a drag from China-exposed luxury giants.
The benchmark STOXX 600 index rose 0.3 per cent, extending gains after its third-straight weekly rise.
European luxury stocks — including LVMH, Pernod Ricard and Hermes International — dipped between 0.7 per cent and 1.5 per cent.
The STOXX 600 index started November on a steady footing, aided by a better-than-expected reporting season and hopes that the Federal Reserve will deliver rate hikes in smaller increments.
A survey on Monday showed investor morale in the euro zone was improving in November, reflecting hopes that recent warmer temperatures and falling energy prices will prevent gas rationing on the continent this winter.
ABC/Reuters
