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Australian shares edged up in choppy trade, with a rise in energy and gold stocks offsetting losses from the banking and tech indexes, while investors awaited a central bank rate decision to combat pressures from soaring inflation.
Key points:
- The RBA is widely expected to lift the cash rate by 50 basis points
- Over the first eight months of the year, the ASX has lost 8.2 per cent
- US markets will be closed tonight for Labor Day
Global stocks generally ended last week lower, as investor sentiment remained subdued on fears of aggressive rate hike bets, coupled with fears over further disruptions to European gas supply from Russia.
Meanwhile, local investors are awaiting the cash rate decision from the Reserve Bank on Tuesday, where it is expected to raise interest rates by 50 basis points for the fourth consecutive time, according to a Reuters poll, to combat inflation which had hit a two-decade high.
The ASX 200 closed up 24 points, or 0.3 per cent, to 6,852.
Energy stocks led the gains for the day, climbing as much as 3.9 per cent in their best session in almost a week, tracking higher Brent crude prices ahead of a OPEC meeting, with Woodside Energy and Santos rising 4.3 per cent and 3.1 per cent.
Swissquote Bank senior analyst Ipek Ozkardeskaya said investors would be closely watching the OPEC meeting.
"Russia is not the OPEC’s only geopolitical headache. There is also the possibility of a nuclear deal between the US and Iran, that titillates the Saudis," she said.
"OPEC doesn’t want to see around 4 million barrels of Iranian oil hitting the market and pulling prices lower. Therefore, they could well use the excuse of an eventual deal to cut output, again."
New Hope Corp jumped 5.7 per cent, Paladin Energy firmed 6.4 per cent and Beach Energy gained 5.2 per cent.
Miners also rose 2.1 per cent, with giants such as Rio Tinto and BHP gaining 1.8 per cent and 3.2 per cent, despite weak steel demand sentiment from China.
But Fortescue weighed on the market after going ex-dividend today — it was down 4.6 per cent.
Other resources stocks were generally higher, with Whitehaven Coal up 6.5 per cent and Coronado Global Resources rising 7.5 per cent.
Gold stocks jumped 1.5 per cent, their biggest rise in more than a week, as sentiment for the precious metal rebounded due to a weaker dollar, with sector majors like Newcrest Mining and Northern Star Resources gaining 0.8 per cent and 1.2 per cent, respectively.
But financials dropped about 0.4 per cent, with the Big Four banks losing in the range of 0.6 per cent and 0.9 per cent, while the domestic technology stocks lost more than 0.8 per cent.
Imugene was another big loser, shedding 8.2 per cent.
By 4:24pm AEST, the Australian dollar was down at 67.89 US cents while Brent crude oil was up, trading at $US95.15 a barrel.
Wall St ends lower as jobs report gain fades
Data showed on Friday that US employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7 per cent suggested there could be less pressure on the Federal Reserve to deliver a third 75-basis-point interest rate hike this month.
This initially cheered investors and helped the S&P 500 index zoom up over 1 per cent. But the gains reversed into losses over the day, hounded by concerns that a 75-basis-point rate hike was still in the cards.
The S&P 500 and the Dow Jones Industrial Average lost 1.1 per cent each, and the Nasdaq Composite dropped 1.3 per cent.
Softer data is seen as alleviating the need for the Fed to raise rates to aggressively curb inflation, moves which the market worries could bring on a recession.
Indeed, some analysts said the latest jobs data kept alive the debate about whether the Fed will raise interest rates by 50 basis points later this month, or 75 basis points.
"We continue to expect the Fed to hike by 50 basis points in September and November. This report contained enough good news for the Fed," analysts at Bank of America (BofA)said in a note to clients.
But hawkish remarks from Secretary of Treasury Janet Yellen on Friday after the jobs data, where she was quoted as saying that US inflation remained too high and that it is the Fed's job to bring it down, dampened the initial euphoria.
This was compounded by news of further disruptions to Russian gas supplies in Europe.
"The G7 announced the imposition of an as-yet unspecified December price cap on Russia's oil exports, and Russia turned off Nord Stream 1 gas flows, and markets tumbled," wrote Rabobank global strategist Michael Every.
"Stocks and bonds went down — but Brent oil went up before easing off highs."
European stocks rallied 2 per cent off Thursday's six-week lows, while Britain's FTSE jumped 1.9 per cent, all ahead of that news on energy supplies.
Rallying stock markets helped the MSCI world equity index climb 0.5 per cent. For the week, however, it suffered a 2.7 per cent drop, which would mark its third straight week of losses.
Fresh lockdowns in China had earlier fuelled concerns about global growth, and high energy costs as a result of the war in Ukraine are weighing on Europe.
"The market is laser-focused on how aggressive the Fed is going to be with its hiking cycle," said Giles Coghlan, chief currency analyst at HYCM, adding that expectations for higher rates have solidified since a speech last week by Fed Chair Jerome Powell at the Jackson Hole central banking conference.
The markets are worried about "China slowing, eurozone recession and a hawkish Fed," he said.
Equity funds recorded the fourth largest weekly outflow of 2022, while bond funds saw investors pull out money for a second straight week, BofA said in a note.
ABC/Reuters