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Aussie shares hovered near a two-week high in cautious trade ahead of this afternoon’s RBA interest rate announcement.
Declines in mining and tech stocks helped ease the S&P/ASX 200 down two points or 0.02 per cent. Gains in supermarkets, Wesfarmers, Telstra and some of the banks helped cushion the market from a deeper loss.
The Reserve Bank met this morning and was expected to lift the cash rate target by a quarter of a percentage point this afternoon.
What’s driving the market
Mixed leads from Wall Street and declines in key commodities offered investors few reasons to continue yesterday’s buying. The ASX 200 had its best session in three weeks yesterday, rising 0.62 per cent as buyers took advantage of stock prices near their lowest since mid-January.
Overnight, US stocks attempted to build on last week’s rebound, but ran out of gas as treasury yields turned higher. The S&P 500 finished 0.07 per cent ahead after earlier rising as much as 0.8 per cent.
“U.S. equity markets closed flattish overnight, giving back early gains as stronger-than-expected data saw U.S. treasury yields rebound towards recent highs. Excluding transportation, Factory orders rose by 1.2% in January, recovering from a 1.2% fall in December, becoming the latest February data release reinforcing the robust economic data in January,” IG market analyst Tony Sycamore said.
A tenth straight interest rate hike this afternoon is seen as a near-certainty, meaning the main interest in this afternoon’s 2.30 pm AEDT announcement lies in the RBA’s accompanying guidance. The key sentence last month indicated “further increases” in the “months ahead”.
“If that line is repeated then the RBA looks set to hike in April and May absent a big surprise in the data. Given the run of data has been on the softer side since February, we doubt the RBA would want to pre-commit so firmly, and think a step back in language to something more akin to November and December when the Board expected ‘to increase interest rates further over the period ahead’,” NAB economist Taylor Nugent said.
A survey released this morning indicated consumer confidence remains near post-pandemic lows. The ANZ-Roy Morgan confidence index edged down 0.1 percentage points to 79.9.
Going up
Funeral services provider InvoCare soared 35.2 per cent to $12.10 after US private equity firm TPG Global took advantage of recent share price weakness to launch an unsolicited takeover offer. TPG pitched a preliminary, non-binding indicative offer of $12.65 per InvoCare share. Shares in the Australian company closed at $8.95 yesterday after it reported a $1.8 million full-year loss.
Sayona Mining climbed 5.32 per cent to 24.75 cents after securing funding for its Canadian lithium projects by placing shares at a significant premium to its last closing price. PearTree Securities will pay $54.9 million for 174.5 million shares at a price of 31.5 cents per share.
Santos edged up 1.96 per cent after passing a milestone for developing a natural gas project in Papua New Guinea. The firm said its joint venture had launched fully-integrated front-end engineering and design for the project, which is due to reach first production in late 2027/early 2028.
Consumer stocks shrugged off the threat of another rate rise. Recession-proof supermarkets Cole and Woolworths gained 0.96 and 0.93 per cent, respectively. Flight Centre advanced 1.25 per cent, Super Retail Group 0.99 per cent and Bega Cheese 1.32 per cent.
Retail conglomerate Wesfarmers firmed 0.89 per cent. Other heavyweight gains included Telstra +1.1 per cent, Macquarie Group +1.17 per cent and ANZ +0.48 per cent.
Going down
Megaport plunged 12.02 per cent on news of the unexpected departure of its CEO. Vincent English tendered his resignation effective today. Chair and founder Bevan Slattery will act as interim chief executive until a replacement is appointed.
Most iron ore producers fell after China’s state planner sought advice on curbing recent price increases and the steel hub of Tangshan imposed environmental caps on production.
BHP declined 1.42 per cent. Rio Tinto shed 0.7 per cent after settling without admitting liability charges in the US over bribery allegations. The miner will pay a US$15 million civil penalty for alleged offences under the Foreign Corrupt Practices Act. The charges brought by the US Securities and Exchange Commission related to payments made by a consultant in 2011 relating to a project in Africa.
Fortescue Metals bucked the trend, rising 1.24 per cent as Chinese ore prices bounced 1.1 per cent this morning.
Overnight weakness in coal, lithium and industrial metals weighed. Lake Resources dropped 3.49 per cent, Liontown 2.91 per cent, Coronado 2.64 per cent and Chalice Mining 2.09 per cent.
Yesterday’s best performer, BrainChip, gave back around half of its gain for the week, falling 6.72 per cent. Imugene shed 5.36 per cent.
Viva Energy slid 3.55 per cent as its shares traded without the right to the next dividend. Also trading ex-dividend were Northern Star -2.33 per cent, Lovisa -1.46 per cent and Sonic Healthcare -1.54 per cent.
Other markets
Asian markets advanced. The Asia Dow lifted 0.16 per cent, Hong Kong’s Hang Seng 0.43 per cent, Japan’s Nikkei 0.51 per cent and China’s Shanghai Composite 0.18 per cent.
S&P 500 futures improved five points or 0.12 per cent.
Oil built on last night’s three-week high. Brent crude climbed 28 US cents or 0.3 per cent to US$86.46 a barrel.
Gold faded US$2.80 or 0.15 per cent to US$1,851.80 an ounce.
The dollar firmed 0.08 per cent to 67.36 US cents.
