Shares rebound on Fed rate cut hope, fuelling tech bump
A potential reduction in US borrowing costs is giving global investors’ confidence, and that sentiment is flowing through the local stock exchange.
AUSTRALIA’S share market is clawing back some of the previous week’s losses, tracking with a Wall Street uptick on the back of renewed interest rate cut hopes.
The S&P/ASX200 rose 78.7 points by midday on Monday, up 0.94 per cent, to 8,495.2, as the broader All Ordinaries gained 86 points, or 0.99 per cent, to 8,775.5.
The move followed a strong finish on Wall Street on Friday after New York Federal Reserve President John Williams left the door open to near-term interest rate cuts, easing market jitters around higher borrowing costs and tech valuations, Westpac economist Mantas Vanagas said.
“Comments from Fed’s Williams on Friday reminded that the Fed funds rate cut in the December FOMC (Federal Open Market Committee) remains on the table, prompting a notable market reaction,” he said.
“US equities ended a volatile week on a positive note, but most European and Asian equity markets followed the US sell-off from Thursday.”
Ten of 11 local sectors were in the green in early trade, while energy stocks slipped 0.7 per cent, tracking an easing oil price as the White House continues to pressure Ukraine to concede territory to Russia under a proposed peace plan.
Woodside and Santos slipped lower by lunchtime while coal producers and uranium stocks traded higher.
Australia’s tech sector rebounded 2.3 per cent, the best performer and leading interest rate-sensitive segments like real estate (+1.0 per cent), industrials (+2.0 per cent) and financials (+0.5 per cent) higher.
Commonwealth Bank shares gained 0.6 per cent to $154.00, beating its big four competitors but the stock is still down more than 13 per cent since its $2.5 billion first-quarter net profit failed to allay investor worries about its valuation.
The move came as the bank announced the departure of group executive technology and chief information officer Gavin Munroe, with CIO central technology Rodrigo Castillo and CIO business technology Victoria Ledda to share the role in his stead.
Qube was the top-200’s best performer, rocketing almost 19 per cent to $4.84 after Macquarie Group’s $11.6 billion takeover bid for the logistics group.
Raw materials rebounded 1.1 per cent after tanking almost four per cent on Friday, as investors picked up battered gold stocks and as Rio Tinto led the iron ore giants higher.
BHP edged 0.5 per cent higher to $40.55 after abandoning plans to merge with US copper play Anglo American.
Gold has held relatively steady, trading hands at $US4,064 ($A6,297) an ounce.
In other news, Droneshield announced an independent directors’ review into the sale of more $70 million in shares by insiders and reassured shareholders about its trajectory despite the exit of its US boss and the destruction of three-quarters of its share price value in seven weeks.
Baby Bunting shares dipped roughly one per cent after its chief executive Mark Teperson was diagnosed with a rare type of bone marrow cancer. His prognosis is considered low risk.
Shares in Autobarn owner Bapcor rebounded 1.5 per cent after appointing Lachlan Edwards as chair, lightening the workload for chief executive Angus McKay, who previously served dual roles.
The car parts retailer’s share price has tumbled from $5.11 in July, following a host of operational issues and a recent guidance downgrade.
The Australian dollar rebounded from August lows over the weekend to trade at 64.55 US cents, up slightly from 64.47 US cents on Friday at 5pm.
