ASX extends rally after retail figures top forecasts



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The laggards

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Energy companies were a drag on the local bourse and ended the day in red after shares in the sector dipped 0.1 per cent following a slump in oil prices.

Brent crude fell 3.4 per cent to $US76.12 a barrel after top exporter Saudi Arabia cut the February official selling price of its flagship Arab Light crude to Asia to the lowest level in more than two years. The global benchmark had increased to almost $US80 a barrel in recent weeks over rising geopolitical tensions in the Middle East.

Energy giant Woodside fell 0.4 per cent and Santos dipped 0.3 per cent. Shares in Ampol, Yancoal, Whitehaven Coal and Viva Energy Group, however, rose.

Suncorp led the large-cap declines, its shares falling 1.4 per cent, followed by IGO (down 0.9 per cent) and Lottery Corporation (down 0.6 per cent).

Meanwhile, Worley shares were in trading halt pending a further announcement after News Corp reported allegations of “illegality and bad faith” by an Ecuadorian tribunal.

The Australian dollar traded unchanged at 67.16 US cents.

The lowdown

The Reserve Bank of Australia is looking for a slowdown in the economy to keep the cash rate on hold when it meets for the first time in 2024 next month.

BetaShares chief economist David Bassanese said the impact of the November retail trade data on the Reserve Bank’s decision won’t be crucial.

“Month-to-month sales numbers at the end of the year should be taken with a grain of salt because of the volatility due to shifting seasonal patterns,” Bassanese said. “Black Friday sales are becoming a more and more important picture of spending in November, and that maybe to some extent the strong spending in November could dampen spending in December.”

The gains on the ASX come after the US market rallied overnight in New York. The S&P 500 closed 1.4 per cent higher at 4763.54, the Nasdaq Composite rallied 2.2 per cent, while the Dow Jones Industrial Average added 0.6 per cent, held back by a slump in Boeing shares.

US megacaps such as Amazon and Google’s parent company Alphabet gained more than 2.3 per cent as Treasury yields fell ahead of readings on inflation and a new supply of US government debt this week, with the benchmark 10-year US Treasury yield hitting a low of 3.966 per cent on the session.

“This is definitely a yield-driven market for now and investors are trying to discount when and how many rate cuts we will see, the timing and the magnitude of rate cuts,” said Bill Merz, head of capital markets research at US Bank Wealth Management in Minneapolis.

“Now we’re probably in a more rational place in terms of yields, and it’s a question of, is the market getting that right and are yields falling for the right reasons or the wrong reasons? And investors have so far taken the view that yields are falling for all the right reasons, that the Fed is navigating what thus far has been a soft landing.”

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Apple gained 2.4 per cent after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from February 2 in the United States.

Chipmakers Nvidia and Advanced Micro Devices surged more than 5.5 per cent each. The Philadelphia SE Semiconductor Index was up 3.3 per cent after dropping 5.8 per cent last week, its biggest weekly percentage fall since October 2022.

Meanwhile, Boeing plunged 8 per cent after the plane maker and US regulators gave the go-ahead on Monday for airlines to inspect jets that were grounded after a panel blew off an Alaska Airlines-operated 737 MAX 9 in mid-flight that forced a dramatic landing of the airliner over the weekend.

The S&P 500 energy index led declines among the 11 S&P 500 sectors, and was last down 1.2 per cent after hitting its lowest level in a month.

On Friday, the benchmark S&P 500 snapped a nine-week streak of gains, as investors dialled back expectations on how aggressive the Federal Reserve would be in cutting interest rates this year following a mixed bag of economic data.

Atlanta Fed President Raphael Bostic said on Monday that the central bank’s dual goals of lowering inflation and maintaining low unemployment are not yet in conflict.

Money markets now see a 69.5 per cent chance of at least a 25-basis-point rate cut as soon as March, according to CME’s FedWatch Tool, down from 88.5 per cent a week ago.

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