Australian shares edged higher in afternoon trading, tracking gains on Wall Street as investors scrutinized the US Federal Reserve’s path for interest rate hikes, while closely watching the Russian-Ukrainian peace talks.
- The ASX 200 hit a one-month high on Thursday, gaining 1.1pc
- Wall St indices continued to climb after an aggressive outlook from the US Fed
- Oil prices rose 8%, gold rose for second straight session
Around 1pm AEDT, the ASX 200 rose 25 points, or 0.4%, to 7,276, with mining and energy stocks leading the advance.
The benchmark has gained almost 3% so far this week in what could be its best week since February last year.
Miners climbed 1.6% on strong iron ore prices, but were poised for a second straight weekly decline, weighed down by swings in commodity prices.
Sector heavyweights Rio Tinto, Fortescue Metals Group and BHP Group rose between 1.5% and 2%.
Energy stocks gained nearly 2.4% on soaring oil prices amid fears of supply shortages in the coming weeks due to sanctions on Russia.
Paladin Energy (+10.5pc) and Beach Energy (+2.6pc) were among the best performers.
Major oil and gas explorers Woodside Petroleum and Santos advanced 3.7% and 2% respectively.
Technology stocks (+1.2 pc) followed their American peers on the rise.
The sub-index has gained 1.7% so far this week, heading for its biggest weekly gain in seven months.
Block Inc jumped 7.1%, while WiseTech Global WTC.AX rose 0.8%.
Finances, on the other hand, plummeted after a three-day winning streak but were on course for their best week since February last year.
Healthcare stocks fell 0.2%, led by a 0.2% decline in biotech giant CSL.
Qube Holdings fell 0.7% to $3 after the ACCC said it would not pursue enforcement action over Qube’s acquisition of Newcastle Agri Terminal (NAT), but remains concerned about potential impacts on the supply chain for bulk grain export through the port. from Newcastle.
The ACCC also said it would continue to monitor developments in the industry.
Megaport and Abacus Property fell 7.6% and 6% respectively.
Star Entertainment shares fell 4.8% to $3.2 after news outlets reported money laundering allegations, hitting their lowest level since late 2020.
Wall St closes higher as worries ease around Fed and Russia default
All three major Wall Street indexes closed higher, up more than 1%, on Thursday.
Investors were reassured that Russia may, at least for now, have avoided what would have been its first external bond default in a century.
Indeed, creditors have received payment, in dollars, for coupons on Russian bonds that matured this week, two market sources told Reuters on Thursday.
This result boosted risk appetite in a market that was benefiting from some bargain hunting.
The Fed had raised interest rates by a quarter of a percentage point on Wednesday, as expected, and laid out an aggressive plan for further hikes, while policymakers also cut economic growth projections for the year.
According to Michael James, managing director of equity trading at Wedbush Securities, Russian payout news and the breaking of “upside” technical decline lines in indices – including the S&P and Nasdaq – all boosted shares.
“People are more comfortable with the fact that rates are going up. We’ve talked about it, ad nauseam, [by Fed] President [Jerome] Powell since early December.
“The fact that there were no significant negative surprises in the Fed’s plans coming out of the meeting, and Powell’s comment, gave people the feeling that we may have seen too bad that there will be any in the short term.”
Describing the Fed’s plans as dovish, Phil Blancato, managing director of Ladenburg Thalmann Asset Management in New York, also said the continuation of Russian-Ukrainian peace talks had helped the mood.
“There is a potential conflict resolution overseas, the positive effects of the Federal Reserve and actions at a very fair entry point, providing an opportunity to add risk.”
The Dow Jones Industrial Average rose 1.23% to 34,480.76, the S&P 500 gained 1.23% to 4,411.67 and the Nasdaq Composite added 1.33% to 13,614.78.
BoE raises rates to pre-pandemic level
European equities also gained in volume after the Fed’s rate hike and a similar move by the Bank of England.
The Bank of England raised interest rates again on Thursday in a bid to prevent rapidly rising inflation from taking hold, but it softened its language on the need for further increases as households are hit hard affected by soaring energy bills.
Eight of nine members of the Monetary Policy Committee (MPC) voted to raise the Bank Rate to 0.75% from 0.5%, bringing the UK borrowing cost benchmark back to its pre-level the pandemic.
Britain’s central bank raised rates in three consecutive meetings for the first time since 1997.
The pan-European STOXX 600 index rose 0.5%, while the MSCI gauge of stocks across the world gained 1.5%.
Meanwhile, the London Metal Exchange (LME) was hit by further glitches early Thursday, which delayed the opening and saw nickel futures fall 8% from the limit.
The new chaos came after a Chinese billionaire short bet on nickel, forcing the LME to close on Tuesday.
Oil prices rose more than 8%, continuing a series of wild daily swings, as the market rebounded from several days of losses on renewed attention to supply shortages in the coming weeks due to sanctions against Russia.
As of 7:15 a.m. AEDT, benchmark Brent crude futures gained 8.7% to $106.7 a barrel.
The Australian dollar was up at 73.78 US cents this morning.
Gold rose 1% as the US dollar and Treasury yields fell.
Spot gold added 0.5%, to settle at US$1,937 an ounce, at 7:14 a.m. AEDT.