Market wrap: fresh highs beckon following market record
WEEKLY MARKET REPORT
The Australian share market zoomed to a new record high on Friday as it chased Wall Street higher with a broad-based rally.
By the Friday close the ASX 200 had risen an impressive 1.47% to a record close of 7699.4 points after earlier hitting an intraday high of 7703.6 points.
A strong performance by interest rate sensitive sectors including banks, real estate and also technology stocks was the major contributor on the back of increasing certainty that the Reserve Bank will be cutting official interest rates later this year.
Falling inflation spurs rate cut predictions
The December quarter inflation numbers led many analysts to conclude that rate cuts are becoming a certainty and the economy is heading for a soft landing, a picture which led to a 1.9% advance for the week.
Investors are also playing a bit of catch up with Wall Street, which has been rising for months now on the back of surging technology earnings, a stronger than expected economy and expectations of interest rate cuts.
Most amazing of all was a 1.2% rise in the banking sector, which came on the same day as some heavily crumbling share prices for Japanese bank Aozora and US bank New York Community Bank on worries about their bad debt exposure to US commercial property.
Banks, property zoom ahead
That US property exposure doesn’t exist for the Australian banks, which steamed ahead, with shares in Commonwealth Bank (ASX: CBA) up 1.5% to $115.81, Westpac (ASX: WBC) up 1.2% to $24.05, National Australia Bank (ASX: NAB) up 1.1% to $32.25 and ANZ (ASX: ANZ) up 1.3% to $27.26.
The listed real estate sector was also going gangbusters, up a stellar 3.3%, with some property stocks really starring such as Goodman Group (ASX: GMG) shares which were up 6.2% to $26.98, Scentre (ASX: SCG) up 2.7% to $3.10, Lifestyle Communities (ASX: LIC) up 2.8% to $17.93 and Ingenia Communities (ASX: INA) up 3.5% to $4.47.
The Vanguard Australian Property ETF (ASX: VAP) showed how widespread the listed property bullishness was, with shares rising 3.7% to $86.93.
Tech and uranium also higher
We may not have a highly developed technology sector like the United States but it still gained 3.1% as local stocks rode a wave of bullishness on the back of shares in Facebook parent Meta which soared to a record high in after-hours trade on guidance for strong ad sales growth in the first quarter of 2024.
Similarly, there was good news for the zooming uranium sector with spot prices nearing 16- year highs of $US106.25 per pound after Kazakh giant Kazatomprom repeated its warning about production challenges in 2024.
With analysts pointing to a uranium deficit in the not too distant future, share prices were firmer with Boss Energy (ASX: BOE) shares adding almost 8% to $6.11 and Paladin Energy (ASX: PDN) shares up 7% to $1.38.
In other notable individual share movements, asset manager Pinnacle (ASX: PNI) added a healthy 8.6% to its share price to reach $10.84 after it revealed affiliates’ funds under management rose above $100 billion in December and it reported a flat half-year profit.
Small cap stock action
The Small Ords index rallied 2.47% for the week to close at 2972.3 points.
ASX 200 vs Small Ords
The week ahead
The coming week is one which will test the market’s resolve as a differently formatted decision from the Reserve Bank will give more insight into the bank’s assessment of the economic outlook.
Reserve Bank Governor Michele Bullock will hold a media conference on 3.30pm on Tuesday to explain the RBA’s decision which is released an hour earlier.
No change in interest rate settings is expected but analysts will be eager for any hints about a removal of a tightening bias, with the RBA’s quarterly Statement on Monetary Policy also released.
On Friday Ms Bullock will be appearing before the House of Representatives Standing Committee on Economics.
Input from local and offshore economic releases are expected to be minimal with retail trade figures for December and real spending for the December quarter plus Chinese consumer and producer prices data the main announcements.
Company profits will continue to be the big influence with a swag of Australian releases and a continuation of US profit results.
Locally, some of the companies to watch out for include Argo Investments, Mesoblast, Nick Scali, Amcor, AGL Energy, Charter Hall Long Wale Reit, Mirvac, News Corp, Transurban, Unibail-Rodamco-Westfield, REA Group and Boral.
US companies to report include Caterpillar, McDonalds, DuPont, Eli Lilly, Spotify, Ford Motor, Fox, Hilton, News Corp, Walt Disney, Harley Davidson and Ralph Lauren.