The Australian sharemarket has started the week on a high note, buoyed by Wall Street’s upward swing amid rising expectations of US interest rate cuts. The S&P/ASX 200 surged by 81.4 points, or 1 percent, reaching 8497.9 in early afternoon trade on Monday. All 11 sectors experienced gains, with technology and materials leading the charge.
Mining stocks were among the top performers. BHP saw a 0.5 percent increase after announcing it was abandoning its pursuit of a takeover of Anglo American, following preliminary discussions between the two companies. This marks the second time in two years that BHP has stepped back from acquiring Anglo. Meanwhile, Rio Tinto rose by 2.2 percent and Fortescue Metals Group gained 1.4 percent. Gold miners also saw gains, with Northern Star up 1.4 percent, Evolution Mining up 2.1 percent, and Newmont up 1.7 percent. Notably, rare earths miner Lynas surged by 4.4 percent.
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 edged 0.1 percent lower. Energy stocks, on the other hand, faced declines, with Woodside Energy dropping 1.2 percent, Ampol down 0.2 percent, and Santos retreating by 0.5 percent.
Market Movements and Key Announcements
In a significant development, logistics group Qube Holdings announced that Macquarie Asset Management had made a non-binding proposal to acquire the business on behalf of its investor clients. The offer of $5.20 per share valued Qube at approximately $11.6 billion, representing a premium of nearly 28 percent compared to Qube’s last closing share price. As a result, Qube shares soared by 18.6 percent to $4.82.
Meanwhile, the Australian dollar was trading at US64.53¢ at 12.56pm AEDT, reflecting the broader market optimism.
Wall Street’s Volatile Week
On Friday, the S&P 500 rallied nearly 2 percent before closing with a 1 percent gain. The Dow Jones Industrial Average climbed 493 points, or 1.1 percent, while the Nasdaq Composite rose 0.9 percent. This marked a fitting end to a week characterized by significant volatility, with the S&P 500 remaining just 4.2 percent below its record high.
The volatility on Wall Street has been driven by two key questions: have prices for high-flying stocks like Nvidia and bitcoin risen too high, and is the Federal Reserve finished with its interest rate cuts? Investors found some reassurance in a speech by John Williams, President of the Federal Reserve Bank of New York, who indicated there is “room for a further adjustment” to interest rates, suggesting a potential December rate cut.
Traders are now betting on a nearly 72 percent probability of a December rate cut, up from 39 percent just a day earlier, according to CME Group data.
Technology and Cryptocurrency Volatility
Despite a strong profit report from Nvidia, concerns linger about the long-term profitability and productivity of AI investments. Nvidia’s stock experienced significant swings, ultimately closing with a 1 percent loss after initially gaining. Similarly, Amazon saw a reversal from an early loss to a 1.6 percent gain.
Bitcoin also experienced volatility, briefly plunging below $US81,000 before recovering to around $US85,000. This is down from nearly $US125,000 last month, reflecting ongoing market uncertainty.
Nearly 90 percent of stocks in the S&P 500 rose, although their movements were overshadowed by the volatility in Big Tech stocks like Nvidia.
Looking Ahead
The market’s focus now shifts to upcoming Federal Reserve decisions and their implications for global markets. Investors remain cautiously optimistic, hoping for clarity on interest rate policies and their impact on economic growth and investment returns.
As the week progresses, market participants will closely monitor economic indicators and corporate earnings reports for further insights into the health of the global economy.
