ASX edges lower despite gains for banks

The Australian share market has finished about where it started the day, despite another strong performance by the big banks.

The benchmark S&P/ASX200 index on Thursday finished down 4.9 points, or 0.07 per cent, to 6642.6, while the All Ordinaries dipped 7.8 points, or 0.11 per cent, to 6834.5.

State Street Global Advisors equity strategist Julia Lee told AAP that the market was once again treading carefully ahead of monthly US Consumer Price Index data, set to be released at 11.30pm AEDT.

The monthly readouts have been a huge catalyst for markets this year as the Federal Reserve has raised interest rates to get a handle on inflation, which makes risk assets like equities look less attractive.

Ms Lee said that if the producer price figures released on Wednesday night are any guide, inflation could once again be higher than the consensus estimates of an 8.1 per cent rise for September.

The market’s attention is also turning to the US third-quarter earnings season, Ms Lee said, with consensus estimates still pricing in 10 per cent growth in earnings per share this year.

“This looks too optimistic given tightening conditions. While price has already come down to reflect slowing conditions, an earnings correction is still ahead of us,” she said.

The domestic annual general meeting season will be key to gauging whether an earnings correction is imminent, and which sectors will be hit, Ms Lee said.

“We will be watching margin compression as well as expectations around earnings growth.”

Nine of the ASX’s 11 official sectors were lower on Thursday.

The outliers were consumer discretionaries and the financial sector, with the former edging higher and the latter posting a solid 1.4 per cent gain following Bank of Queensland’s strong full-year earnings results from Wednesday.

NAB was up 2.4 per cent to $30.59, ANZ gained 2.1 per cent to $25.27, Westpac added 3.0 per cent to $23.07 and CBA climbed 1.9 per cent to $98.13.

That’s a two-month high for CBA and NAB and a three-month high for Westpac and ANZ.

Elsewhere in the financial sector, NIB fell 12 per cent to $6.61 after the health insurer completed a $135 million institutional placement at an eight per cent discount to fund its entry into the National Disability Insurance Scheme industry.

Qantas soared 8.7 per cent to a three-month high of $5.62 after the airline reported it expected to post a first-half profit of $1.2 billion to $1.3 billion, far more than analysts expected.

“It’s a remarkable turnaround that comes after $7b accumulated losses since 2020,” chief executive Alan Joyce told reporters.

In tech, Elmo Software soared 27.7 per cent to a one-month high of $3.09 after the cloud-based human resources company confirmed it had received tentative takeover approaches from various parties, including US private equity firm Accel-KKR.

The heavyweight mining sector was down 0.6 per cent, with BHP dropping 0.8 per cent to $39.23 but Fortescue rising 1.4 per cent to $16.99 and Rio Tinto up 0.6 per cent to $95.64.

The interest-rate sensitive property sector was the worst performer, dropping 1.9 per cent ahead of the US inflation read. Westfield owner Scentre Group dropped 2.7 per cent and Mirvac fell 2.9 per cent.

Like the ASX200, the Australian dollar was also little changed, buying 62.71 cents, from 62.78 US cents at Wednesday’s close.


* The benchmark S&P/ASX200 index on Thursday dropped 4.9 points to 6642.6, a decline of 0.07 per cent.

* The broader All Ordinaries fell 7.8 points, or 0.11 per cent, to 6734.5.


One Australian dollar buys:

* 62.71 US cents, from 62.78 US cents at Wednesday’s close

* 92.07 Japanese yen, from 91.77 yen

* 64.66 Euro cents, from 64.57 Euro cents

* 56.66 British pence, from 57.02 pence

* 111.91 NZ cents, from 112.07 NZ cents.

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