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ASX dips as Wall Street drifts; Bitcoin surges to two-year high
By Sumeyya Ilanbey
The Australian sharemarket remained in negative territory at midday but had largely pared back its early morning losses.
The S&P/ASX 200 was down 9.4 points, or 0.12 per cent, to 7643.4 about 12.40pm, with five out of 11 industry sectors in the red. Consumer staples (up 1.84 per cent) were gaining, while real estate investment trusts (down 1.03 per cent) continued to lead the declines in the early afternoon.
Wall Street has made a middling start to the week. Credit: Bloomberg
Shares of Coles jumped 5.86 per cent after the grocery giant said it grew its revenue in the December half by 6.8 per cent to $22.2 billion, thanks to successful sales for seasonal events such as Christmas, Halloween and Father’s Day, although profit fell 8.4 per cent to $589 million after one-off costs of divesting Coles Express.
Reece Group soared 13.66 per cent after the plumbing supplier reported a 20 per cent rise in half-year net profit to $224 million and declared an interim dividend of 8 cents per share.
Other top-performing mega-cap stocks were bottle shop owner Endeavour Group (up 3.44 per cent) and power company Mercury NZ (up 2.87 per cent).
Woodside added 0.97 per cent even after the oil and energy giant reported a 74 per cent fall in annual profit as global fossil fuel prices retreated from historic highs.
Looking at commodities, Brent crude rose 1.5 per cent to $US82.85 a barrel overnight, iron ore tumbled 4 per cent to $US115.20 a tonne and spot gold was down 0.3 per cent to $US2028.57/oz.
Iron ore giants and market heavyweights BHP (down 0.39 per cent), Fortescue (down 0.95 per cent) and Rio Tinto (down 1 per cent) all fell, pulling the mining sector down 0.73 per cent.
TPG Telecom (down 5.27 per cent) was the weakest large-cap stock on the local bourse, followed by Northern Star Resources (down 3.79 per cent) and Lynas Rare Earths (down 3.64 per cent).
On Wall Street overnight, the S&P 500 slipped 0.4 per cent after closing last week at an all-time high. The Dow Jones fell 0.2 per cent and the Nasdaq composite dipped 0.1 per cent.
Investors there are looking to the release of January’s personal consumption expenditures price index (PCE) - the Fed’s preferred inflation gauge - on Thursday, which could dampen the recent investor enthusiasm should the data indicate price pressures are not cooling fast enough.
Markets have all but ruled out a cut at the Fed’s March meeting and have recently pushed back expectations for easing to June from May, CME’s FedWatch Tool showed, on the heels of surprisingly strong consumer and producer price data.
“It’s a lot of position squaring ahead of the big data, investors are just trying to make sure they’re not underweight or overweight since trends are not moving,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle.
A strong forecast from chip designer Nvidia last week added to this year’s artificial intelligence frenzy, helping to push the Dow and S&P to new highs and the Nasdaq just shy of its November 2021 record, while keeping disappointment over the Fed’s delayed rate cut in check.
Bitcoin rose to the highest in more than two years overnight, climbing above $US54,000, amid growing optimism that persistent investor demand through exchange-traded funds will drive the price of the largest cryptocurrency back to record levels.
Bitcoin was 5.7 per cent higher at $US54,661 at 11.06am AEDT on Bitstamp.
Berkshire Hathaway was one of the heaviest weights on the US sharemarket, even though Warren Buffett’s company reported stronger results for the end of 2023 than analysts expected. Class-B shares of the company, whose subsidiaries include GEICO, Fruit of the Loom and Brooks running shoes, initially jumped more than 3 per cent but later fell back to a loss of 1.9 per cent.
On the heels of broader criticism from some financial analysts that prices all over Wall Street have soared too high in its big run since Halloween, the famed investor warned shareholders not to expect any more “eye-popping performance” because there are no bargains available of big enough size to make a meaningful difference. Buffett is notorious for buying companies when they’re cheap.
The S&P 500 is on track to close out its fourth straight winning month and is coming off its 15th winning week in the last 17. And the stock market may not have been cheap even when it bottomed out in October 2022. That marked the priciest bear-market low in history, according to some measures of stock prices against corporate earnings, says Doug Ramsey, chief investment officer of Leuthold.
This recent rally got going last October amid hopes that inflation is cooling enough for the Fed to cut interest rates several times this year. Such cuts would relax the pressure on the economy and financial system, while goosing investment prices.
Expectations are still high for rate cuts to come eventually this year, but traders have been delaying their forecasts following some stronger-than-expected reports on the economy. That data in the meantime raises hopes that growth in profits for companies can strengthen, which helps stock prices too.
Last week, stocks got a big boost after another blowout report from Nvidia added more chum to the frenzy that’s already built around artificial-intelligence technology. Nvidia, whose chips help power AI technologies, rose another 0.3 per cent on Monday, and it’s already up nearly 60 per cent so far this year.
With AP
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