The Australian sharemarket will start at an 11-year high today, but will come under pressure following mixed news offshore on Wednesday night and yesterday.
The factors ranged from weak economic data from Japan, Germany and South Korea, less than stellar earnings reports from some leading US companies such as Boeing (but solid earnings from Facebook and especially Microsoft), a steadying in oil prices, a small fall in iron ore prices and gold and weak sharemarkets in China.
In Japan, the markets will be closed for 10 days from close of business today for the Golden Week national break and then the start of the transition to the new Reiwa era Emperor.
That means a source of interest in Australian shares and fixed interest securities will be absent for the next two weeks. Trading volumes on the Tokyo Stock Exchange have fallen this week ahead of the long break.
So the opening here today on the ASX will hesitant, even though the weak March quarter inflation data increased the chance of an interest rate cut and pushed the ASX 200 to the 11 year high on Wednesday.
The ASX 200 Index rose 62.7 points, or 1%, to 6,382.1 on Wednesday after the 0.9% jump on Tuesday. The broader All Ordinaries closed up 59.5 points, or 0.9%, to 6470.6 after its 1% rise the day before.
The local sharemarket broke past last August’s decade-long high of 6,352.2 at the start of trade on Wednesday and didn’t look back.
That was even after the weak CPI report (no growth in the CPI in the March quarter from the three months to December and the annual rate falling to 1.3%).
Investors ignored the real story from the weak CPI report – that the economy is sluggish and apart from the continuing solid jobs growth, there’s easing price pressures and signs of price disinflation which could become worrying if continued.
The only positive from the report is that the sharp fall in petrol and fuel prices in the quarter have been replaced by sharp rises since March, running into April and if that continues, inflation this quarter could end up re-emerging.
The question now is can the Reserve Bank wait that long to when the next CPI report is released in the last week of July.
Wednesday saw the major banks jump on the weak inflation news. Shares in the Commonwealth Bank rose 1.3% to $75.16, Westpac shares added 1.6% to $27.58, ANZ climbed 1% to $27.35 and NAB closed 1.2% higher at $25.66.
Macquarie Group shares stood out though, hitting all time highs after it announced it was entering the cheap end of the mobile phone market.
Macquarie added 0.9% to close at $135.77 after touching a record high of $136.47 during trading.
Tech shares took their lead from reports from Wall Street (and could follow that up today after the solid figures from Facebook and especially Microsoft whose market cap topped the $US1 trillion level for the first time ever on Wednesday).
Wisetech Global shares ended up 4.7% at $22.35, Altium shares rose 3.6% to $34.28, Afterpay Touch climbed 3.6% to $23.75 and Appen closed up 1.4% at $25.35.
Healthcare stocks were also stronger, with CSL leading the market, adding 2.4% to end at $195.00. Sonic Healthcare jumped 3.6% to $25.48 and Healius shares rose 3.5% to $3.00.
Bellamy’s Australia was the star though with the shares surging 15.6% to $11.12 after the company received approval from China’s market regulator, the State Administration for Market Regulation, for a new Bellamy’s branded formulation-series to be produced at the ViPlus Dairy facility in Toora, Victoria. The approval means the company has moved closer to being able resume the sale of its infant formula products in China.
