The truth : The corporate earnings season bolstered investor sentiment in Wednesday’s session as the local stock market saw its second day of gains of the week.
Adam Dawes, senior investment advisor at Shaw and Partners, said today’s positive session could suggest the market is stabilizing.
“The market seems to be grappling with inflation and interest rates, and potentially feeling a bit more comfortable with what’s happening in the world,” he said. Despite this, Dawes expects market volatility to continue for another three to six months.
Meanwhile, commodities are under pressure as demand deteriorates, affecting the supply and demand driven sector. Global oil and iron ore prices fell as China showed no sign of easing its COVID-zero policy. BHP closed around 1% lower after issuing a trade update, while Origin Energy fell 1.4% despite expectations of a sharp rise in profits due to soaring prices some gas.
Dawes said China’s announcement was a big wake-up call for mining giants such as BHP, Rio Tinto and Fortescue Metals, as President Xi Jinping steps up efforts to reduce China’s reliance on suppliers external.
“It doesn’t just impact [miners]it impacts Apple, Nike [and other businesses] who rely on China for their growth.
BHP warned of global uncertainty in the coming months and criticized Queensland’s coal tax as a barrier to investment in green energy and industry.
“The Queensland government’s near tripling of high-end royalties remains a serious concern and a threat to investment and jobs in the state,” the mining giant said.
Despite its share price falling on the local stock exchange, Origin Energy on Wednesday improved the outlook for the energy markets division and said rising Australian electricity costs will drive electricity bills up to ‘in 2024.
The electric and gas company expects gas profits to rise this year and next, amid the global supply crisis caused by the war in Ukraine.
Stocks closed broadly higher on Wall Street again, adding to weekly gains for major indexes that have been mired in a broad-based slump amid inflation and recession fears.
The S&P 500 rose 1.1%, with about 90% of stocks in the benchmark index posting gains. The Dow Jones rose 1.1% and the Nasdaq composite ended up 0.9%.
Tweet of the day:
Quote of the day: “Australia now finds itself in an environment that we all knew would eventually happen: rising interest rates and falling house prices. Both are happening sooner and at a faster rate. than most people expected a year ago,” Wayne Byres, chairman of the Australian Prudential Regulation Authority (APRA), said on Wednesday.
Bryes also said falling property prices in the country have both financial and social benefits, predicting that the banking system will weather the housing crisis caused by rising interest rates.
The total value of residential dwellings fell in the June quarter from $162.4 billion to around $10 billion, according to the Australian Bureau of Statistics.
You may have missed: ANZ expects headline inflation to pick up to 7% year-on-year, after raising its trimmed average inflation rate (the average inflation rate after distribution price cuts) forecast for the third quarter. from 0.2%, to 1.6%.
The bank now expects Australia’s interest rate to peak at 3.6% by the middle of next year and stay there for just over a year.
With Clancy Yates and AP
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