Aust shares climb as US inflation eases: Wednesday 14 December

The local share market has closed higher following more signs that US inflation has peaked, raising fresh hopes for a dovish pivot from the Federal Reserve.

The S&P/ASX200 index finished on Wednesday up 48 points, or 0.67 per cent, to 7251.3, while the broader All Ordinaries gained 49.5 points, or 0.67 per cent, to 7438.7

The gains came after the US Labor Department announced overnight that US consumer prices rose 7.1 per cent in the year to November, less than economists had expected and down from a 7.7 per cent year-on-year rise the month before.

“That’s definitely the talk of the town at the moment, and really, the most important thing that’s happened, because of the fact that it shows that inflation is trending the right way,” said Australian Stock Report senior analyst Tom Armstrong.

The inflation readout could influence the US Federal Reserve, which will announce its latest decision on rate hikes around dawn on Thursday, Australian time.

The central bank is widely expected to raise rates another 50 basis points as part of its yearlong fight against inflation, but traders will be carefully watching the rhetoric around the pace of next year’s increases.

“You know, (Fed chairman) Jerome Powell has got a habit of doing weird and wonderful things sometimes, so who knows,” Mr Armstrong told AAP.

“If they do confirm that they will be slowing down rate rises, I dare say a lot of the traders will sort of jump in on that and really look to fill their boots with a lot of companies, particularly in the tech sector, these have just been beaten up.”

Every ASX sector finished higher on Wednesday as the ASX gained steadily from about 11.30am onwards to close close to the highs of the day.

Utilities was the biggest gainer, climbing 2.1 per cent as Origin Energy added 2.9 per cent to $7.49, clawing back more of Monday’s losses.

“A lot of the US-dollar focused stocks did quite well, like commodities had a quite a strong day, gold as well, which is something that’s really not performed for ever,” Mr Armstrong said.

The price of the yellow metal jumped over $US1,810 an ounce for the first time since early July on the inflation report and the expectation of slower rate hikes. Because gold of course does not pay a yield, the progressively higher interest rates this year have had the effect of making it look less lustrous.

Newcrest added 2.2 per cent to $21.07, Evolution gained 2.8 per cent to $2.90 and Northern Star rose 1.3 per cent to $10.97.

Also, St Barbara was up 13.9 per cent to 74c and Genesis Minerals gained 12.6 per cent to $1.345 as their shares resumed trading following their merger agreement on Monday.

Elsewhere in the sector, BHP and Rio Tinto both climbed 0.5 per cent, to $46.31 and $114.67, respectively, while Fortescue Metals rose 1.1 per cent to $20.46.

In the heavyweight financial sector, CBA was up 0.5 per cent to $106.92 but the other big three banks were lower.

Westpac dropped 0.4 per cent to $23.57 as chairman John McFarlane told shareholders at its annual general meeting that he would retire in a year’s time, while ANZ was also down 0.4 per cent, to $24.01, and NAB dipped 0.3 per cent, to $30.71.

In the energy sector, Woodside added 1.5 per cent to $35.65 and Whitehaven Coal was up 2.4 per cent to $9.82.

Woolworths was up 0.6 per cent to $34.29 after raising $636 million by selling down its stake in BWS and Dan Murphy’s owner Endeavour Group to 9.1 per cent, from 14.6 per cent.

The supermarket giant plans to use the funds to buy a majority stake in pet food and accessory retailer PETstock, the Australian Financial Review reported.

Endeavour Group, which was spun out from Woolies last year, dropped 4.3 per cent to $6.41.

Meanwhile the Australian dollar had hit a three-month high against its the greenback, which slid after the CPI print. The Aussie was buying 68.42 US cents, from 67.62 cents at Tuesday’s ASX close.

ON THE ASX:

* The benchmark S&P/ASX200 index on Wednesday gained 48 points, or 0.67 per cent, to 7251.3.

* The broader All Ordinaries climbed 49.5 points, or 0.67 per cent, to 7438.7.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 68.49 US cents, from 67.62 US cents at Tuesday’s ASX close

* 92.74 Japanese yen, from 93.04 Japanese yen

* 64.38 Euro cents, from 64.10 Euro cents

* 55.36 British pence, from 55.06 British pence

* 106.24 NZ cents, from 105.76 NZ cents.

Derek Rose
(Australian Associated Press)

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