The Australian sharemarket experienced a notable uptick on Friday morning, driven by a robust performance in technology stocks following Wall Street’s overnight rally. This surge was fueled by a significant agreement between Nvidia and Intel, which sent ripples through global markets.
As of 12:51 AM, the S&P/ASX 200 had risen by 53.9 points, or 0.6 percent, reaching 8799.1. A majority of sectors were in positive territory, with technology and healthcare stocks leading the charge. The telecommunications sector was the sole underperformer.
Technology Sector Shines
Technology shares mirrored the Nasdaq’s upward trend. Notably, Life360, a family location app, saw a 3.8 percent increase, while software giant Xero advanced by 1.6 percent. However, WiseTech, a software logistics firm, surrendered early gains, dipping 0.3 percent in early afternoon trading.
Commonwealth Bank, the largest stock on the ASX, rose by 0.8 percent. The performance among the other major banks was mixed, with ANZ remaining flat, NAB climbing 0.6 percent, and Westpac declining by 0.5 percent.
Mining and Energy Sectors React
In the mining sector, iron ore giants BHP and Fortescue both saw a 0.6 percent and 0.8 percent rise, respectively, while Rio Tinto remained flat. Gold miners also performed well, with Northern Star adding 1.2 percent, Newmont up by 0.7 percent, and Evolution Mining increasing by 1.7 percent.
Energy giant Santos rebounded by 0.9 percent, recovering some losses from Thursday after an Abu Dhabi consortium withdrew its $30 billion bid. Woodside also saw a 0.8 percent increase.
Healthcare Stocks and Currency Movements
Healthcare stocks saw significant gains, with Telix Pharmaceuticals surging by 6.5 percent and CSL rising by 1.4 percent. Meanwhile, the Australian dollar dipped, trading at US66.07¢ at 12:55 PM AEST.
Wall Street’s Influence
Overnight, Wall Street set new records as Nvidia and Intel spearheaded a rally in technology stocks. Their deal, involving a $US5 billion investment by Nvidia in Intel, was a key driver. The S&P 500 rose by 0.5 percent, marking its third consecutive winning week. The Dow Jones added 124 points, or 0.3 percent, while the Nasdaq composite climbed 0.9 percent, with all three indices reaching all-time highs.
Intel soared 22.8 percent, marking its best day since 1987, following Nvidia’s investment announcement. Nvidia’s 3.5 percent climb significantly boosted the S&P 500, highlighting its status as Wall Street’s most valuable company.
The bond market also reacted, with Treasury yields climbing following encouraging economic reports. A decline in unemployment benefit claims suggested a slowdown in layoffs, offering relief after prior data indicated a concerning increase.
Federal Reserve’s Role
The Federal Reserve’s recent interest rate cut, its first this year, aims to support the slowing job market amid persistent inflation. Fed Chair Jerome Powell warned of the delicate balance required, as the economy faces the unusual challenge of simultaneous slowdowns in job growth and persistent inflation.
Expectations remain high for further rate cuts, but any unexpected halt could unsettle stock markets. Critics argue that stock prices have surged excessively, partly due to heavy speculation on continued rate cuts.
Smaller stocks, often benefiting from lower interest rates, led the market rally. The Russell 2000 index of small stocks surged 2.5 percent, joining larger indices in reaching new highs.
Global Markets and Other Developments
Globally, European markets rose, while Asian markets showed mixed results. London’s FTSE 100 added 0.2 percent following the Bank of England’s decision to hold its main interest rate steady.
In the bond market, the yield on the 10-year Treasury jumped to 4.11 percent from 4.06 percent, reflecting expectations for continued Fed rate cuts.
Cryptocurrency stocks also saw gains, with Coinbase Global rising 7 percent, Bullish up 20.7 percent, and Circle Internet Group increasing by 7.2 percent. Bitcoin surged past $US117,500 following the Fed’s rate cut.
Novo Nordisk’s US-traded stock rose 6.3 percent after a study showed its pill version of Wegovy aided significant weight loss. Additionally, its Ozempic product was found to reduce cardiovascular risks for type 2 diabetes patients.
Conversely, Disney shares fell 1.1 percent after its ABC division suspended Jimmy Kimmel’s show indefinitely due to controversial comments. FCC Chairman Brendan Carr criticized Kimmel’s remarks, suggesting potential accountability for misinformation.
As markets continue to react to these developments, investors remain attentive to central bank policies and global economic indicators. The Market Recap newsletter provides a daily summary of trading activities and insights, available each weekday afternoon.
