Australian Market Modestly Higher

The Australian stock market is trading modestly higher in a choppy session on Tuesday, recouping the losses in the previous session, with the benchmark S&P/ASX 200 just below the 7,000 mark, following the broadly positive cues from Wall Street overnight, as traders cautiously await cues from the Reserve Bank of Australia meeting later in the day.

The RBA, which will hold its first meeting of the year on Tuesday, is expected to end its bond buying program amid high inflation. The central bank is expected to end its extraordinary monetary stimulus, upgrade its economic forecasts and potentially bring forward its interest-rate guidance.

Concerns over the domestic Covid-19 cases have softened as the daily new cases are on a steady decline. New South Wales reported 12,818 new cases and 30 deaths on Monday and Victoria also reported 11,311 new cases and 34 deaths. Queensland recorded 7,588 new cases and ten deaths, ACT reported 522 new cases, South Australia reported 1,266 new cases and Tasmania reported 699 new cases.

The benchmark S&P/ASX 200 Index is gaining 25.90 points or 0.37 percent to 6,997.50, after touching a high of 7,022.90 and a low of 6,945.70 earlier. The broader All Ordinaries Index is up 33.40 points or 0.46 percent to 7,301.70. Australian stocks closed modestly lower on Monday.

Among the major miners, Rio Tinto is losing more than 2 percent, BHP Group is declining almost 3 percent and Fortescue Metals is down almost 1 percent, while Mineral Resources is gaining more than 2 percent. OZ Minerals is flat.

Oil stocks are mostly higher. Origin Energy is gaining almost 3 percent, Santos is edging up 0.3 percent and Beach energy is adding almost 1 percent, while Woodside Petroleum is edging down 0.5 percent.

Among the big four banks, Westpac is edging up 0.5 percent, National Australia Bank is gaining more than 1 percent and ANZ Banking is edging up 0.1 percent, while Commonwealth Bank is edging down 0.3 percent.

Among tech stocks, Appen and Zip are surging almost 7 percent each, while Xero is gaining 2.5 percent and WiseTech Global is adding almost 2 percent..

Gold miners are mostly higher. Northern Star Resources is gaining almost 2 percent, Evolution Mining is adding almost 1 percent and Newcrest Mining is rising more than 3 percent, while Gold Road Resources is losing almost 2 percent. Resolute Mining is flat.

In other news, shares in Boral are surging more than 6 percent after the Building material company announced a massive $3 billion capital return.

In economic news, the manufacturing sector in Australia continued to expand in January, albeit at a slower pace, the latest survey from Markit Economics showed on Tuesday with a manufacturing PMI score of 55.1. That’s down from 57.7 in December, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. This marks the twentieth straight month in which the sector grew, though the rate of expansion fell to a five-month low.

The total value of retail sales in Australia was down a seasonally adjusted 4.4 percent on month in December, the Australian Bureau of Statistics said on Tuesday – coming in at A$31.926 billion. That missed expectations for a flat reading following the 7.3 percent jump in November. On a yearly basis, retail sales were up 4.8 percent.

The ABS also said the value of owner-occupied home loans in Australia was up a seasonally adjusted 5.3 percent on month in December, coming in at A$22.47 billion. That follows the 7.6 percent spike in November. On a yearly basis, owner-occupied loans rose 12.4 percent, investment lending surged 73.9 percent and overall lending jumped 26.5 percent.

In the currency market, the Aussie dollar is trading at $0.707 on Tuesday.

On Wall Street, stocks moved sharply higher over the course of the trading day on Monday, extending the rally seen in the previous session. Tech stocks helped lead the continued advance on Wall Street, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages all posted notable gains, although the Nasdaq still outperformed its counterparts. While the Nasdaq soared 469.31 points or 3.4 percent to 14,239.88, the Dow jumped 406.39 points or 1.2 percent to 35,131.86 and the S&P 500 surged 83.70 points or 1.9 percent to 4,515.55.

The major European markets also mostly moved to the upside on the day. While the U.K.’s FTSE 100 Index closed marginally lower, the French CAC 40 Index rose by 0.5 percent and the German DAX Index shot up by 1 percent.

Crude oil prices moved up sharply on Monday amid possible disruptions in supply due to mounting political tensions in Europe and the Middle East. West Texas Intermediate Crude futures for March ended higher by $1.33 or about 1.5% at $88.15 a barrel. WTI futures gained over 17% in the month, the best monthly returns since February 2021.

Market Analysis