The Australian sharemarket saw a promising rise on Thursday afternoon, buoyed by mining giants, as Wall Street hit new records overnight fueled by hopes of interest rate cuts in the United States. As of 1:52 PM AEST, the S&P/ASX 200 had climbed 25.5 points, or 0.3%, reaching 8878.50, with eight out of eleven industry sectors trading positively. Meanwhile, the Australian dollar slightly dipped by 0.1% to US66.64¢.
Mining stocks led the charge, with iron ore leaders BHP, Fortescue Metals, and Rio Tinto gaining 0.9%, 1.5%, and 1.6% respectively. Gold miners also experienced a boost, as spot gold prices rose 1% overnight. Northern Star Resources increased by 0.6%, while Newmont saw a 0.8% rise. Energy stocks were not left behind, with New Hope Corp surging 7.6% despite a 7.7% fall in full-year profit to $439.4 million, as the company managed to offset a 17% drop in coal prices by increasing production.
Wall Street’s Record Run and Tesla’s Surge
Overnight in New York, Wall Street continued its record-breaking streak at the start of a week that could test the sustainability of the recent market rally. The S&P 500 rose by 0.5%, surpassing its previous all-time high set last week. The Dow Jones Industrial Average saw a modest increase of 0.1%, while the Nasdaq composite surged 0.9% to reach its all-time high.
Tesla played a pivotal role in these gains, jumping 3.6% after CEO Elon Musk purchased approximately $US1 billion ($1.5 billion) worth of stock through a trust. This move is seen as a strong signal of Musk’s confidence in the company’s future, especially as Tesla’s stock had been slightly down for the year.
Tesla’s stock price came into the day with a slight loss for the year so far, and the purchase could be a signal of Musk’s faith in it.
Market Anticipation Ahead of Federal Reserve Decision
The market is eagerly awaiting the Federal Reserve’s upcoming decision on interest rates, expected on Wednesday. The consensus is for a rate cut, which would be the first of the year, potentially revitalizing a slowing job market. Stocks have already hit record highs in anticipation of this move, with expectations for continued rate cuts through the end of the year and into 2026.
However, there is a risk of market disappointment if the Fed does not meet these expectations. The focus will be on Fed Chair Jerome Powell’s press conference following the decision, where he will outline the Fed’s projections for interest rates and the economy in the coming years.
“’Too Late’ must cut interest rates now, and bigger than he had in mind,” Trump wrote on his social media network on Monday, using his trademark all-caps style.
Global Economic Concerns and Corporate Movements
Meanwhile, geopolitical tensions continue to loom, with China accusing Nvidia of violating anti-monopoly laws. Although no immediate penalties were announced, the situation remains under investigation, causing Nvidia’s stock to initially dip before recovering.
In the corporate sphere, Intel saw a 2.9% rise after reducing its expense forecast for the year, following the sale of a 51% stake in its Altera business to Silver Lake. Conversely, Alaska Air Group faced a 4.7% decline due to anticipated lower third-quarter results, attributed to high summer fuel costs.
Back in Australia, Sigma Healthcare saw a 0.8% increase after appointing former JB Hi-Fi boss Richard Murray as its finance chief. However, Super Retail Group faced a 3% drop after dismissing its CEO, Anthony Heraghty, amid a legal battle involving allegations of misconduct.
Looking ahead, the next significant economic update is expected on Tuesday, with the US government set to release data on consumer spending at retail outlets for the past month. This will provide further insight into the health of the US economy and consumer confidence.
