The Australian share market has made further gains at midday after yesterday’s $60 billion sell-off as calm returned to Wall Street and as more people were employed in August.
Key points:
- The Dow Jones index rose 0.1pc to 31,135, the S&P 500 put on 0.3pc and the Nasdaq Composite rose 0.7pc to 11,720
- The FTSE 100 index fell by 1.5pc to 7,277, the DAX in Germany lost 1.2pc to 13,028, and the CAC 40 in Paris fell 0.4pc to 6,222
- At 10:30am AEST, the All Ordinaries index rose 0.2pc to 67,085, while the ASX 200 index rose 0.2pc to 6,842
The Bureau of Statistics said the national jobless rate rose 0.1 percentage point to 3.5 percent in August from 3.4 percent in July, on a seasonally adjusted basis, as more people returned to the workforce.
Employers hired 33,000 people over the month, reversing a fall in July.
Capital Economics said the first rise in Australia’s unemployment in 10 months may prompt the Reserve Bank to slow the pace of rate increases, although economists disagree.
At 12:30pm AEST, the All Ordinaries rose 0.7 per cent to 7,117, while the ASX 200 index also rose by 0.7 to 6,877.
The market fell nearly 3 per cent yesterday, the largest percentage fall in three months.
Wall Street saw its biggest losses since 2020 on Tuesday after consumer prices rose in North America last month sparking fears of more steep interest rate rises.
Movers and shakers
More sectors were higher than lower on the ASX 200 over lunchtime.
Leading the gains were energy stocks after a rise in oil prices, banks, miners technology, and some consumer stocks.
Education firms, healthcare and industrials weighed on the market.
The best performers on the ASX 200 index were coal firms Coronado Global Resources (+8.9 per cent), New Hope (+4.6 per cent), and Whitehaven Coal (+4.3 per cent).
Going down were miner South 32 (-6.4 per cent) and Fletcher Building (-4.5 per cent), which both traded ex-dividend.
The Australian dollar gained further after the employment data came out, up 0.2 per cent to 67.61 US cents.
Myer profit
Retailer Myer said its annual net profit rose nearly 6 per cent over the year to $49 million, helped by strong sales growth at both stores and online.
Sales rose 12.5 per cent over the year to nearly $3 billion.
Myer chief executive John King said it was the best profit result for the second half of the financial year for the company in a decade.
“Despite the broader economic uncertainty, we are well placed with the right value based proposition of affordable and aspirational brands,” he said.
Investors get a fully franked final dividend of 2.5 cents a share.
Myer shares dropped 1.6 per cent to $0.63 at 12:25 pm AEST.
Canadian software firm Dye and Durham has got the go-ahead from the Foreign Investment Review Board to take over share registry Link Administration.
However, investment house Morningstar said Link’s buyout was unlikely given the regulatory issues it faces in the UK.
Link’s shares rose 0.3 per cent after this week’s slump.
Tyro Payments (-3.8 per cent) appointed Jonathan Davey as its new chief executive to replace outgoing boss Robbie Cooke.
Wall Street recovers ground
Bargain-hunting investors moved in to buy the dip after Tuesday’s battering which saw Wall Street post its worst losses since the height of the coronavirus pandemic in 2020.
All three major Wall Street indices had a volatile session but ended higher.
“Today is a lick-your-wounds day, after taking body blows yesterday,” said Ryan Detrick, chief market strategist at Carson Group in the US.
“The inflation debate continues and yesterday was a harsh reminder that this is a tough battle and the Fed needs to remain aggressive to put a lid on widespread inflationary prices we’re seeing.”
Energy stocks did the best on the Dow Jones Industrial Average after an overnight rise in oil prices.
By the close, the Dow Jones index rose 0.1 per cent to 31,135, the S&P 500 put on 0.3 per cent and the Nasdaq Composite rose 0.7 per cent to 11,720.
US wholesale prices down
US producer prices fell for the second month in a row in August as the cost of gasoline declined further and the price of goods fell.
The producer price index for final demand fell 0.1 per cent last month, after falling by 0.4 per cent in July.
That is the first back-to-back drop since 2020.
However, core inflation, which removes volatile items like prices of food and energy, rose 0.4 per cent over the month, up from 0.2 per cent in July.
The cost of services increased by 0.4 per cent in August, mainly because of higher margins received by wholesalers and retailers and a shortage of workers.
Over the year, the PPI rose 8.7 per cent, down from a 9.8 per cent increase in July.
“Most likely retail goods prices will at least soften somewhat in line with PPI and that should keep Fed officials breathing a small sigh of relief after the still-high, but not unexpectedly strong PPI reading,” said Andrew Hollenhorst, US chief economist at Citigroup.
ANZ economists said the PPI figures “did nothing to allay fears that the Fed will need to hike considerably further if it is to meet its inflation mandate.”
The market expects the US central bank to raise official interest rates next week by 0.75 per cent.
UK inflation eases
While consumer inflation rose in the US in August, retail prices in the United Kingdom eased back over the year to 9.9 per cent, from a 40-year high of 10.1 per cent in July, because of a fall in petrol prices.
However, core inflation, which strips out volatile food and energy prices, lifted, with food prices going up for the 13th month in a row.
US inflation stood at 8.3 per cent over the year, still lower than in the UK.
European stocks fell on the back of the rise in consumer prices in the US and fears of steeper increases in interest rates.
In London, the FTSE 100 index fell by 1.5 per cent to 7,277, the DAX in Germany lost 1.2 per cent to 13,028, and the CAC 40 in Paris fell 0.4 per cent to 6,222.
The International Energy Agency said global demand for oil is expected to come to a standstill later in the year as the global economic slowdown deepens.
However, the agency thinks fuel demand will rebound next year.
Oil prices rose after US inventories fell to the lowest level since 1984 and amid threats of railway strikes in the US.
The Biden administration is considering refilling its strategic oil reserve if West Texas crude falls below $US80 a barrel.
Brent crude increased 1.5 per cent to $US94.52 a barrel, while spot gold fell 0.3 per cent to $US1695.74 an ounce.
ABC/Reuters
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