The Australian share market saw a positive start on Wednesday, with the S&P/ASX 200 gaining 0.30% as investors eagerly await the release of US December inflation data. Wall Street saw mixed performance overnight, with several influential stocks declining. Key performers included Guzman y Gomez, mining giants, and the big four banks.
The Australian share market commenced the day with an uptick, mirroring the fluctuating trend observed on Wall Street overnight as investors eagerly anticipate the release of US December inflation data scheduled for Thursday. The S&P/ASX 200 ascended by 24.7 points, equivalent to 0.30 percent, reaching 8255.70 points at 10.58am AEDT, with nine out of the eleven industry sectors demonstrating positive performance.
This positive momentum followed a mixed performance on Wall Street on Tuesday, characterized by a decline in several influential stocks. Guzman y Gomez, a Mexican-themed fast food chain, emerged as one of the top performers on Wednesday morning, with shares surging by five percent after UBS upgraded the food retailer to a “neutral” rating. Mining giants also experienced a resurgence, with Rio Tinto and Fortescue registering gains of 0.4 percent and 2.1 percent respectively. The upward trajectory of oil prices buoyed energy stocks, as Woodside Energy and Santos witnessed increases of 0.4 percent and 0.6 percent respectively. However, department store chain Myer experienced a downturn, with shares declining by 1.5 percent. Within the real estate sector, shopping center owners played a pivotal role in driving the sector upward, with Scentre and Stockland advancing by 0.4 percent and 3.5 percent respectively. Star Entertainment experienced a notable surge of nearly 3.6 percent after the embattled casino operator disclosed that Xingchun Wang, whose registered address is in Macau, China, had acquired a substantial stake in the company. The healthcare sector, on the other hand, was one of two sectors in the red on Wednesday morning, marked by declines in biotech giant CSL (down 1 percent) and software medical imaging company Pro Medicus (down 0.6 percent). WiseTech Global, the nation’s largest tech company, also faced a setback, with shares falling by 2.8 percent. In contrast, the big four banks delivered a strong performance, with CBA, Westpac, ANZ, and NAB reporting gains of 0.4 percent, 0.2 percent, 0.8 percent, and 0.3 percent respectively. Overnight in the US, stocks received a boost from a report indicating that inflation at the US wholesale level was lower than economists had anticipated last month. This positive signal precedes a report due Wednesday, which will reveal the extent of inflation faced by US consumers at gasoline pumps, grocery stores, and car dealerships in December. Persistently high inflation readings and a string of better-than-expected updates on the US economy have placed Wall Street in a weeks-long slump, further distancing it from the numerous all-time highs achieved last year. The concern is that robust economic data will persuade the Federal Reserve to offer less relief this year through lower interest rates. The Fed has already hinted that it is likely to reduce rates only twice in 2025, down from an earlier projection of four. Speculation is mounting about whether the Fed may opt for no rate cuts this year. These uncertainties have propelled Treasury yields sharply higher in the bond market, intensifying the pressure on the stock market. However, yields moderated their upward trajectory following the update on wholesale inflation. The yield on the 10-year Treasury remained stable at 4.78 percent, its level late Monday. It was significantly lower at 3.65 percent in September. The two-year Treasury yield, which more closely reflects expectations for Fed action, eased to 4.36 percent from 4.39 percent. On Wall Street, KB Home surged 4.8 percent after delivering a better-than-expected profit for its latest quarter. While rising Treasury yields have made mortgages more expensive, CEO Jeffrey Mezger stated that buyers “continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.” Mezger attributed the company’s ability to deliver more homes in the three months through November to faster build times. H&E Equipment Services more than doubled, exceeding $US90, after United Rentals announced its intention to acquire the smaller rival for $US92 per share in cash. This deal values H&E, which rents aerial work platforms, earthmoving equipment, and other products, at $US4.8 billion, including approximately $US1.4 billion of net debt. Indexes fluctuated between gains and losses throughout the day, largely due to declines in several Big Tech stocks. Nvidia fell 1.1 percent and was the second-heaviest weight on the S&P 500. The sole stock dragging more on the market was Eli Lilly, which dropped 6.6 percent after indicating that it anticipates reporting weaker revenue for the last three months of 2024 than previously forecast. Several of the nation's largest financial institutions will release their latest earnings reports on Wednesday, including JPMorgan Chase and Wells Fargo, as the earnings reporting season gains momentum. Such reports are always under scrutiny, but companies may face heightened pressure to deliver impressive results. If Treasury yields continue to rise, either stock prices need to fall or companies must achieve larger profit growth to compensate. Crude oil prices retreated, partially reversing their strong gains in recent weeks, which had also been contributing to inflationary pressures. Benchmark US crude eased 1.7 percent to $US77.50 per barrel. Brent crude, the international standard, fell 1.3 percent to $US79.92 per barrel.
AUSTRALIAN SHARE MARKET S&P/ASX 200 WALL STREET INFLATION US ECONOMY FED OIL PRICES MINING
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