The Australian share market took a step back from the brink with the first daily rise for almost two weeks on Friday.
With the start of a new month traders summoned enough bravery to take on some risk and took heart from falling oil prices and some strong US corporate earnings.
The ASX 200 rose by 0.7%, or 64 points, to 8729.8 points, which cut the weekly loss down to just 0.6%.
That decisively brought an end to the longest losing streak since 2018 – eight days of losses.
Oil down a little
Oil prices fell back quite sharply from Thursday’s four-year high tide mark of $US126.41 to trade at around the $US111 mark as US corporate profits continued to surprise on the upside and the US economy continued to show modest growth in the first quarter.
The biggest contributor to Friday’s rising market was the materials sector, with shares in BHP (ASX: BHP) rising 2.3% to $54.94 while shares in its Pilbara iron ore rival Rio Tinto (ASX: RIO) also jumped 2.7% to $171.97.
Lithium charge
One of the more noteworthy rises were shares in lithium miner Liontown Resources (ASX: LTR) which surged 12.3% to a record high of $2.64.
A quarterly report released on Thursday showed that Liontown posted its strongest financial quarter since it commenced production, reaching its first ever positive net cash flow of $33 million.
That result was boosted by strong spodumene sales and the transition to a fully underground operation at its Kathleen Valley lithium mine which boosted production more than forecast.
Liontown also expects to maintain strong operational momentum through the rest of the year. Consumer staples also rose, with shares in supermarket giant Coles (ASX: COL) up 3.7% to $22.92 after sales were firmer than expected.
Coles noted a shift to home-brand products and more at-home meals, although rival Woolworths shares (ASX: WOW) fell a further 0.8% to $34.15.
Banks go against the grain
The only sector to go down for the day was financials, as ANZ shares (ASX: ANZ) dropped 2.8% to $35.61 as its cash profit of $3.78 billion beat expectations, but still failed to answer investor worries about weaker revenue trends. Sector leader Commonwealth Bank shares (ASX: CBA) also fell 0.4% to $173.04. Despite surging fuel costs which caused Qantas (ASX: QAN) to cut more flights and shift aircraft to European routes, the airline’s shares rose 0.8% to $8.48 as investors approved of the network changes to reduce costs and target more profitable routes. Not so fortunate were shareholders in ResMed (ASX: RMD) who lost 3.5% to $28.73 despite delivering a marginal earnings beat for the March quarter.
Investors remain concerned about soft device sales growth in the US and the departure of chief financial officer Brett Sandercock.
Punters disappointed
Those punting on improvements for troubled casino group SkyCity Entertainment (ASX: SKC) were disappointed after shares dropped 5.6% to 51¢ after it lowered earnings guidance, with underlying profit now expected to between $180 million and $190 million instead of $190 million to $210 million.
The Iran war is expected to have a major impact on casinos. Shares in Sequoia Financial (ASX: SEQ) fell 2.4% to 20¢ after it ended a proposed sale of InterPrac Financial Planning to Conquest Investment Partners for just $50,000.
The week ahead
There is little doubt about where all of the action will be this week with the Reserve Bank board making a highly anticipated decision on interest rates on Tuesday.
Most analysts are expecting a rise of 25 basis points to 4.35% after inflation rates remained well above the RBA’s target due largely to rapidly rising oil prices.
Despite a run of “holds” by other central banks around the world, the only real reason for a hold here would be to wait another month for the Federal Budget to land and to “look through” the higher oil prices as a one-off war effect.
If rates do rise as expected, it will be the third rate increase this year and take the cash rate to its highest level since December 2024.
Aussie dollar set to jump?
Higher interest rates would be a negative for the local share market which has already been something of a global laggard, although the Australian dollar is likely to gain more ground on the back of a rate rise.
It will be a big week for corporate news with earnings updates from many companies including NAB, Westpac, Dexus, Vicinity Centres, Amcor, ASX, Light & Wonder, Orica, Block, Macquarie Group, QBE, News Corp and REA.
The Macquarie Australia investor conference in Sydney is on this week with more than 100 companies expected to make presentations over three days.
The US earnings season will continue with some of the reports including Berkshire Hathaway, Palantir, Pinterest, AMD, KKR, Pfizer, PayPal, Shopify, Walt Disney, Uber, DoorDash, Novo Nordisk, McDonald’s, Gilead, Airbnb, Coinbase and Expedia to name just a few.
There is plenty of US data out with the biggest probably the key unemployment data, which is tipped to remain at 4.3%.
