Weekly Wrap: Australian Share Market Soars Past 8600 Points Amid Retail Surge
In an amazing turn of events, the Australian share market managed to close above the key 8,600 points for the first time ever, and it did so with Commonwealth Bank shares falling.
The key to the turnaround was investors snapping up retail shares as they anticipated an interest rate cut from the Reserve Bank in the coming week.
By the close of trade on Friday, the ASX 200 index was up 7.2 points, or 0.1%, to 8,603 points, with eight out of the 11 sectors rising.
Wall Street surging on jobs
It had been a strong week too, up 1% on the back of a good performance by Wall Street after stronger jobs data subdued worries about a slowdown in the world’s largest economy.
Both the S&P 500 and the Nasdaq 100 hit closing records in the lead up to Friday’s ASX trade, and that led to a rise in local technology shares.
Some of the better examples included a 1.1% rise in WiseTech Global (ASX: WTC) to $112.10, a 3.5% rise in Appen (ASX: APX) shares to $1.17 and a 1.9% rise in Life360 (ASX: 360) shares to $33.11.
Big retail has a great day
However, it was some of the large retail stocks where the market really shone with Wesfarmers (ASX: WES) up 0.8% to $84.37, Woolworths (ASX: WOW) rising 0.6% to $31.38, Coles (ASX: COL) up 0.5% to $20.91 and smaller players Aristocrat (ASX: ALL) and Premier Investments (ASX: PMV) both up 1.4%.
The world-beating Commonwealth Bank (ASX: CBA), which has been a driving force in the Australian market, is taking something of a pause, down 0.9% to $178, even as its smaller competitors ANZ (ASX: ANZ), Westpac (ASX: WBC), and National Australia Bank (ASX: NAB) all made small gains.
Commonwealth Bank has now fallen 7.2% from its daily trading record of $192 and has fallen for six of the last seven sessions, leading some to wonder if the somewhat surprising monster bull run in the bank’s shares is starting to falter.
The speculation about interest rate cuts may also be causing investors to move away from the banking sector, which sometimes struggles on the earnings side when interest rates fall.
Materials lower
One of the sectors to fall was materials with the two largest iron ore players, BHP (ASX: BHP) and Rio Tinto (ASX: RIO) falling 1.4% and 1.3% respectively, although Fortescue (ASX: FMG) shares headed in the opposite direction, up 0.4%.
There were some stocks bouncing around on specific news with G8 Education (ASX: GEM) down another 3.5% to 96¢ after a former employee was this week charged with a string of child-related offences.
G8 shares have now fallen every day since that story went public.
Shares in Silk Logistics (ASX: SLH) took off with a 23.3% rise to $2.12 after the ACCC announced it will not oppose DP World Australia’s $174 million takeover of the national container services provider.
After-market automotive parts supplier ARB Corporation (ASX: ARB) shares rose 3.6% to $34.37 after some positive broking reports, and the newly floated GemLife (ASX: GLF) fell 5.8% to $4.08.
That is below its initial public offer price of $4.16 and comes after the shares rose 4.1% on debut on Thursday.
The week ahead
There is no mystery about the biggest economic news in the coming week, with the RBA Board meeting on Monday and Tuesday, and Governor Michele Bullock widely expected to announce a 25-basis-point cut in the official cash rate to 3.6%.
Any variation from that would be a big surprise, but even if the cut is announced as expected, the Bullock press conference will be closely followed for any indications of the trajectory for further cuts and also any commentary on inflation, which has been tracking lower.
Other local announcements include the NAB business index and household spending figures and the big offshore announcements include the US Fed minutes explaining its decision to hold rates steady and the New Zealand Reserve Bank’s announcement of a probable hold on official rates there.