The Australian sharemarket has started the week on a high note, buoyed by Wall Street’s rally amid rising hopes for US interest rate cuts. As of early afternoon trade on Monday, the S&P/ASX 200 climbed 81.4 points, or 1 percent, reaching 8497.9. All 11 sectors experienced gains, with technology and materials leading the charge.
Mining stocks saw significant activity, with BHP advancing 0.5 percent following its announcement to abandon takeover plans for Anglo American after preliminary discussions. This marks the second time in two years that BHP has stepped back from pursuing Anglo. Meanwhile, Rio Tinto jumped 2.2 percent, and Fortescue rose 1.4 percent. Gold miners also performed well, with Northern Star up 1.4 percent, Evolution Mining gaining 2.1 percent, and Newmont increasing by 1.7 percent. Notably, rare earths miner Lynas surged 4.4 percent.
Mixed Performance Across Financial and Energy Sectors
Financial stocks presented a mixed picture. Westpac led the big four banks with a 1.1 percent rise, while Commonwealth Bank added 0.6 percent. However, National Australia Bank and ANZ Bank both edged 0.1 percent lower. In contrast, energy stocks mostly declined, with Woodside Energy down 1.2 percent, Ampol slipping 0.2 percent, and Santos retreating 0.5 percent.
In corporate news, logistics group Qube Holdings received a non-binding proposal from Macquarie Asset Management to acquire the business on behalf of its investor clients. The offer of $5.20 per share valued Qube at approximately $11.6 billion, a premium of nearly 28 percent over its last closing price. Consequently, Qube shares surged 18.6 percent to $4.82.
The Australian dollar was trading at US64.53¢ at 12.56pm AEDT.
Wall Street’s Volatility and Rate Cut Speculation
Last Friday, Wall Street experienced a volatile session, with the S&P 500 rallying nearly 2 percent before closing with a 1 percent gain. The Dow Jones climbed 493 points, or 1.1 percent, while the Nasdaq composite rose 0.9 percent. This marked a tumultuous week for the S&P 500, which ended just 4.2 percent below its record, despite enduring the sharpest hour-to-hour swings since April’s sell-off.
“The jarring moves are testing investors following a months-long and remarkably smooth surge for stocks,” analysts noted, highlighting two unanswered questions: have prices for Nvidia, bitcoin, and other high-profile assets risen too high, and is the Federal Reserve finished with interest rate cuts?
Financial markets found some solace in a speech by John Williams, president of the Federal Reserve Bank of New York, who indicated “room for a further adjustment” to interest rates. This statement sparked hopes for another rate cut in December, a critical factor for Wall Street as stock prices have been buoyed by expectations of rate reductions.
AI and Cryptocurrency Market Dynamics
Despite a strong profit report from Nvidia, concerns linger about the long-term profitability of AI investments. Nvidia’s stock experienced significant fluctuations, initially gaining before dropping 4.3 percent, and eventually closing with a 1 percent loss. Amazon, on the other hand, rebounded from an early loss to gain 1.6 percent.
Bitcoin also faced volatility, briefly plunging below $US81,000 before recovering to approximately $US85,000. This is a notable decrease from its nearly $US125,000 peak last month, reflecting ongoing market uncertainty.
Amid these swings, nearly 90 percent of stocks in the S&P 500 rose, though their movements were often overshadowed by the fluctuations of major tech stocks like Nvidia.
Bond Market and Future Outlook
In the bond market, Treasury yields eased on the back of potential Fed rate cuts. Traders are now betting on a nearly 72 percent probability of a December cut, up from 39 percent the previous day, according to CME Group data. This optimism helped lower the yield on the 10-year Treasury to 4.06 percent from 4.10 percent late on Thursday.
As investors navigate this uncertain landscape, the focus remains on the Federal Reserve’s next moves and their implications for the broader market. The Market Recap newsletter offers a comprehensive wrap of the day’s trading, available each weekday afternoon.
