Banks, utilities boost ASX ahead of RBA rate decision; Fortescue plunges (2024)

Utilities firms and banks lifted the Australian sharemarket on Tuesday ahead of the Reserve Bank’s interest rate decision after stocks on Wall Street rallied on the back of tech companies.

The S&P/ASX 200 Index rose 1 per cent, or 74.9 points, to 7775.2 at about 12.30pm AEST with all sectors trading in the green.

It comes ahead of the Reserve Bank’s decision at 2.30pm AEST in which the central bank is widely expected to keep rates on hold at 4.35 per cent in a continued effort to bring down inflation.

Utilities firms (up 1.8 per cent) were among the strongest companies on the local bourse with Origin (up 2.5 per cent) among the biggest large-cap advancers and APA Group (up 1.2 per cent) and AGL (up 1.1 per cent) both stepping up. Toll roads operator Atlas Arteria (up 3.8 per cent) was the biggest megacap advancer.

Financials (up 1.4 per cent) were also stronger with all four big banks trading in positive territory. CBA climbed 1.7 per cent, NAB jumped 1.4 per cent, Westpac gained 0.9 per cent and ANZ added 1.2 per cent. Macquarie (up 3 per cent) led gains in the sector.

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Meanwhile, miners (up 0.3 per cent) were among the weakest companies on the index with iron ore heavyweight Fortescue losing 4.6 per cent after an institutional investor pressed sell on a $1.1 billion stake in the company after Monday’s closing bell. Lynas Rare Earths (down 1.1 per cent) and South32 (down 0.3 per cent) were also weaker.

Elsewhere, US stocks rose to records as gains for technology companies keep pushing the market higher.

The S&P 500 climbed 0.8 per cent to top its all-time high set on Thursday. The Dow Jones gained 0.5 per cent, while the Nasdaq composite added 1 per cent to its own record.

Autodesk jumped 6.5 per cent for one of the market’s biggest gains after an investment firm said it will try to delay the software company’s annual meeting so it can nominate new directors for the board. Starboard Value also outlined how it says Autodesk hasn’t performed as well financially as it should have. In response, Autodesk said it will review Starboard’s suggestions but added that it has “a clear strategy that is working.”

Chip company Broadcom (up 5.4 per cent) was one of the strongest forces pushing the S&P 500 upward, along with a 2 per cent rise for Apple and 1.2 per cent climb for Microsoft. Tesla added 5.3 per cent.

Continued momentum for Big Tech stocks, along with easing pressure on inflation, has investors “cheering the ‘glass half full’ outlook” instead of focusing on the struggles of lower- and middle-income Americans and other challenges, according to Anthony Saglimbene, chief market strategist at Ameriprise.

Super Micro Computer, which sells server and storage systems used in artificial intelligence and other computing, leaped 5.1 per cent to bring its gain for the year so far to a staggering 212.2 per cent. It’s also part of the supernova around AI that’s been overshadowing almost everything else on Wall Street.

The gains for tech helped offset pressure on the stock market caused by rising Treasury yields in the bond market. The climb in yields erased some of the slack created last week when better-than-expected reports on inflation raised hopes that the Federal Reserve will cut interest rates later this year.

This upcoming week has few top-tier economic reports for the United States, outside of Tuesday’s update on how much customers are spending at US retailers and Friday’s preliminary look at the state of US business activity. Markets will also be closed Wednesday for the Juneteenth holiday.

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A report on Monday said manufacturing in New York state is still contracting, though not by as much as economists expected. Manufacturing has been one of the areas hardest hit by the Federal Reserve’s zeal to keep its main interest rate at the highest level in more than two decades.

GameStop fell 12.1 per cent following its annual shareholder meeting. The stock has been soaring and sinking as it rides waves of enthusiasm by smaller-pocketed investors. At the meeting, CEO Ryan Cohen said the struggling video game retailer will focus on cutting costs, which would involve a “smaller network of stores.”

In the bond market, the yield on the 10-year Treasury climbed to 4.28 per cent from 4.22 per cent late Friday. The two-year Treasury yield, which more closely tracks expectations for the Fed, rose to 4.76 per cent from 4.71 per cent.

With AP

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