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The laggards
Coal miners were weaker with Yancoal (down 1.7 per cent) and Whitehaven (down 0.5 per cent) sliding after a recent rally.
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Meridian Energy (down 3 per cent), Netwealth Group (down 4.2 per cent) and fertiliser and explosives manufacturer Incitec Pivot (down 1.4 per cent) were among the biggest large-cap decliners.
Utilities (up 0.3 per cent) was the weakest sector.
The lowdown
IG Australia market analyst Tony Sycamore said the ASX was buoyed by a strong financial sector and robust iron ore prices.
“The unstoppable ASX200 Financial sector made fresh record highs, led by CBA,” he said, despite ANZ falling on reports that ASIC is investing in dubious trading in government bonds by the bank. Meanwhile, “a 3.6 per cent rally in iron ore to $109.20 on the Singapore futures exchange boosted the big miners.”
Overseas, Wall Street’s blistering rally stretched into a seventh day and vaulted the US stock market to more all-time highs on Wednesday’s session.
The S&P 500 jumped 1 per cent and topped the 5600 level for the first time. The Nasdaq composite also rallied to a seventh straight gain and added 1.2 per cent to its all-time high set a day before. The Dow Jones, meanwhile, swung 1.1 per cent higher.
Big technology companies led the way, as has become the norm on Wall Street, and Taiwan Semiconductor’s US-listed shares rose 3.5 per cent after it said its revenue climbed nearly 33 per cent in June from a year earlier.
Taiwan Semiconductor, or TSMC, makes the chips for Nvidia and others that have been driving the business world’s rush into artificial-intelligence technology. The promise of big profits in the future from AI has sent Nvidia in particular to breathtaking heights over the last year, and Nvidia rose another 2.7 per cent Wednesday to bring its gain for the year so far to 172.5 per cent. It was again the strongest single force pushing the S&P 500 upward.
Fed chair Jerome Powell returned to Capitol Hill to give testimony about interest rates, where he echoed many of his comments from a day before. He said he was “not sending any signals” about when cuts to rates could arrive, but he pointed out the downsides of being too late on them.
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“We’re looking at both sides” of the risks involved in moving its main interest rate, which has been sitting at its highest level in more than two decades, Powell said. Cutting rates too early could allow inflation to reaccelerate, while waiting too long could allow the economy’s slowdown to gather into a recession.
Much of Wall Street is expecting the Fed to begin cutting its main interest rate in September, but traders have a long history of being premature in their calls. Powell gave a nod to recent reports that have shown improvement in inflation following a discouraging start of the year, but he said again the Fed doesn’t have enough confidence that inflation is sustainably heading toward its goal of 2 per cent.
The yield on the 10-year Treasury edged down to 4.28 per cent from 4.3 per cent late on Tuesday and from 4.7 per cent since April. The move since the spring is a significant one for the bond market and offers support for stock prices.
The two-year Treasury yield, which moves more on expectations for Fed action, held steady at 4.62 per cent, where it was late Tuesday.
A report coming on Thursday could cause sharper swings in the bond and stock markets. That’s when the US government will release the latest monthly update on inflation. Economists expect it to show US consumers paid prices for food, airline tickets and everything else that were 3.1 per cent higher in June than a year earlier. That would be a touch slower than May’s 3.3 per cent inflation rate.
European indexes climbed.
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Quote of the day
“While these statistics paint a picture of prosperity – and Australia is undoubtedly prosperous – many Australians are slipping into the bottom end of the wealth ladder,” says business columnist Elizabeth Knight as recently released figures showed Australian adults enjoy a median wealth that is the second-highest in the world.