Market wrap: old school miners push Australian shares higher
WEEKLY MARKET REPORT
Technology might be the talk of the town but it was a solid performance by the old school miners that helped to push the Australian share market higher on Friday.
By the close the resources sector had done all of the heavy lifting to push the ASX 200 up 52.6 points or 0.7% to 7658.3 points, cementing a 0.2% gain for the week.
Gold, oil, iron ore and even lithium prices were up and helped to raise the materials index by a solid 1.5%, with BHP (ASX: BHP) shares up 1% to $45.61 and iron ore and lithium producer Mineral Resources (ASX: MIN) rising 4.7% to $59.75.
Nickel sector gets a reprieve
The hard-bitten nickel miners in West Australia – including BHP – were also handed something of a lifeline with federal resources minister Madeline King putting the metal on the government’s critical minerals list which could lead to eligibility for financial support for a sector which is facing the prospect of thousands of job losses.
A good example was IGO (ASX: IGO) which saw its shares recover strongly with an 8.7% rise.
The local market was chasing Wall Street’s 0.6% rise to a new record high of 5029.7 points on the S&P 500, overcoming the mid-week blues caused by higher-than-expected inflation numbers.
Profit results continue to drive share prices
US profit figures were largely positive which helped to overcome the funk over sticky inflation and traders remained confident that central banks would start to cut official interest rates this year as weak economic growth thrust Japan and the UK into technical recessions.
One of the bigger winners from a profit report was fund manager GQG Partners (ASX: GQG), with investors lapping up the company’s $US2.9 billion ($4.4 billion) of net inflows over the past year, pushing shares up 3.3% to $2.20.
Insurers disappoint
Not so positive was the reaction to results from insurance heavyweights QBE (ASX: QBE) and IAG (ASX: IAG).
Shares in both were weaker after they failed to reach analyst’s forecasts, with QBE shares down 1.7% to $16.11 and IAG shares down 3.8% to $6.08.
Costs and short sellers bite
Investors were also less than excited by the extra costs incurred by the stock exchange operator ASX (ASX: ASX) which saw the shares lose 4% to $65.12 after its underlying net profit fell 7.8% to $230.5 million.
Also, still disappointing investors was fast growing software darling Pro Medicus (ASX: PME), with shares down a further 7.2% to $87.24, taking its two-day fall to 19.3% since its profit result.
While the company is still growing fast, it seems the share price pushed too high, too fast.
Another disappointment was shares in biotech darling Neuren (ASX: NEU) which tumbled 14.7% to $3.39 after a negative report from New York short seller Culper Research.
Culper claimed that Neuren’s US partner, Acadia, has “misrepresented” the safety of Neuren’s blockbuster drug Daybue, which was launched in 2023 as the world’s first effective drug to treat Rett syndrome among children.
Small cap stock action
The Small Ords index slipped 0.31% for the week to close at 2951.5 points
ASX 200 vs Small Ords
The week ahead
Profit results will continue to be important in the coming week, with the US reporting season coming to a close.
It will still feature reports from retailers such as Walmart and Home Depot and some prominent companies such as chip maker Nvidia and Warren Buffett’s famous investment vehicle Berkshire Hathaway.
Here in Australia the reporting season is ramping up with some of the bigger names reporting including Ampol, Bendigo & Adelaide Bank, Cochlear, BHP, Perpetual, Sonic Healthcare, Ansell, ARB, HUB24, Megaport, Netwealth, Sonic Healthcare, Sims Limited, Baby Bunting, Rio Tinto, Iress, Domino’s Pizza, Scentre Group, Stockland, Santos, Star Entertainment , Woolworths, Air NZ, IGO Group, Super Retail Group, Tabcorp, Bega Cheese, Fortescue Metals, Medibank, Lovisa, Newmont, Nine Entertainment, Northern Star Resources, Qantas, Pilbara Mines, Brambles, Eagers Automotive, Sandfire Resources and Block.
In terms of economic announcements, the local feature is wage data in the form of the wage price index on Wednesday, followed by average weekly earnings on Thursday.
Wages have been rising at around 4% for the year so it will be interesting to see if this rate holds firm.
Also, out this week is the minutes of the first Reserve Bank Board meeting of 2024 which was also the first meeting held under the new format, so it might be more revealing than usual.
The release from the first Federal Reserve Open Market Committee (FOMC) meeting of 2024 will also play into how and when investors pencil in their predictions for official interest rate cuts.