ASX gains modestly on more signs of easing inflation – ASX200 up 16.2 points to 7,050 (29/3)

The Australian share market has finished slightly higher on signs domestic inflation is easing, raising hopes the Reserve Bank might soon cease its rate-hiking campaign.

The benchmark S&P/ASX200 index on Wednesday finished up 16.2 points, or 0.23 per cent, to 7,050.3, while the All Ordinaries gained 16.6 points, or 0.23 per cent, to 7,236.0.

The ASX200 had been down as many as 23 points earlier in the morning but gained 15 points in the space of three minutes after the Australian Bureau of Statistics announced that consumer prices rose just 6.8 per cent in the year to February, compared to expectations of a 7.1 per cent jump.

It’s the second straight month of lower inflation, which eased to a 7.4 per cent annual rise in January after apparently peaking at 8.4 per cent in December.

City Index senior analyst Matt Simpson told AAP the ASX’s reaction overall was “pretty muted”, even though he saw it as a final confirmation that the Reserve Bank would not raise interest rates next Tuesday.

“There are analysts still backing the hike who may have a fair point. It’s really a case of what data is being used,” Mr Simpson told AAP.

“But the RBA is looking for a reason to get out of hiking and I think they’ve got their reasons,” he said.

Many economists are predicting a pause next week but ANZ’s Catherine Birch and Felicity Emmett stuck with their contrarian view, writing on Wednesday afternoon that strong business conditions, a tight labour market and inflation that’s still too high would likely lead to another 25 basis point hike.

The ASX’s 11 official sectors finished mixed, with eight up and three down.

The two commodities sectors, energy and materials, were the biggest gainers, both rising 1.2 per cent as iron ore and oil prices climbed.

Fortescue Metals gained 2.9 per cent to $21.16, BHP rose 1.4 per cent to $45 and Rio Tinto added 0.7 per cent to $115.18.

Liontown Resources was up another 0.8 per cent to $2.59, following Tuesday’s 68.5 per cent gain on word the emerging lithium producer had rejected a $5 billion, $3-per-share offer from US lithium giant Albemarle.

Fellow lithium producer Allkem advanced 3.5 per cent and Pilbara rose 2.3 per cent after announcing it would more forward on a $560m expansion project of its Pilgangoora lithium mine in WA.

“”The P1000 investment case is compelling with a payback from this investment expected to be within a year,” CEO Dale Henderson said.

Jervois Global plummeted 41.7 per cent to a five-year low of 6.7c after suspending work on its cobalt mine in the US state of Idaho, given low cobalt prices and higher-than-expected construction costs. Jervois has spent $US130 million ($A194m) building the mine and had a workforce of 280 at the remote site, which will now be reduced to 30.

In the energy sector, Woodside gained 2.6 per cent to $33.84, Santos added 0.6 per cent to $6.99, and Beach Energy was up 1.1 per cent to $1.40.

Coalminers were in the red, however, with Whitehaven down 4.1 per cent, New Hope dropping 3.4 per cent and Stanmore down by two per cent.

The big banks were mixed, with CBA up 0.3 per cent to $96.34 and ANZ edging up 0.1 per cent to $22.66, while NAB fell 2.2 per cent to $27.04 and Westpac retreated 0.7 per cent to $21.37.

The Australian dollar was buying 66.97 US cents, from 66.89 US cents at Tuesday’s ASX close.


* The benchmark S&P/ASX200 index finished Wednesday up 16.2 points, or 0.23 per cent, at 7,050.3.

* The broader All Ordinaries gained 16.6 points, or 0.23 per cent, to 7,236.0.


One Australian dollar buys:

* 66.91 US cents, from 66.86 US cents at Tuesday’s ASX close

* 88.16 Japanese yen, from 87.38 Japanese yen

* 61.73 Euro cents, from 61.85 Euro cents

* 53.30 British pence, from 54.29 pence

* 107.01 NZ cents, from 107.37 NZ cents


Derek Rose
(Australian Associated Press)


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