ASX 200 ends higher near 7,790, awaits monthly Australian CPI on Wednesday
|- ASX 200 Index continues its winning streak, which began on March 15.
- Australian equity market gains grounds despite a lower Wall Street overnight.
- Chinese President Xi Jinping to meet with American executives on Wednesday.
- Adam Neumann made a bid to acquire the bankrupt WeWork for more than $500 million.
The ASX 200 Index recovers its intraday losses. It continues its winning streak following the Westpac Consumer Confidence data from Australia, which fell 1.8% to 84.4 in March 2024 from 86.0 in February, easing from 20-month highs. This development has bolstered market sentiment, leading to speculation that the Reserve Bank of Australia (RBA) would not adopt a hawkish stance. On Tuesday, the index trades higher around 7,790, up by 0.25% at the time of writing. However, Wall Street experienced a modest weakness overnight.
Today sees a significant drop in the A-VIX, plummeting 2.26% to 10.82. The All Ords is down by 0.25% at 8,051. Among the top performers within the ASX 200 Index, Elders surged by 5.04% to 9.38; Beach Energy rose by 4.61% to 1.82; and Premier Investments climbed by 2.99% to 31.56. The bottom performing stocks are Atlas Arteria, which dipped by 0.49% to 5.12; Arcadium Lithium, which experienced a 4.99% decline to 4.19; and Idp Education, which dropped by 3.51% to 17.46.
Chinese President Xi Jinping is set to meet with American business leaders in Beijing on Wednesday, following up on his November dinner with U.S. investors in San Francisco. The meeting was initiated by Evan Greenberg, the chief executive of US insurer Chubb. Among the attendees are Stephen Orlins, president of the National Committee on US-China Relations, and Craig Allen, president of the US-China Business Council.
The Chamber of Commerce suggests that lifting the uranium mining ban in Western Australia (WA) could lead to a yearly economic boost of $1 billion and the creation of 9,000 jobs. A report by the Chamber of Commerce and Industry of Western Australia (CCIWA) echoes the call by the Liberal party for a change in attitude towards uranium mining in WA.
Lithium Universe has completed a study to identify a suitable port location for importing spodumene to its proposed Bécancour lithium refinery in Canada. The company concluded that the optimal port would be located in Bécancour, approximately 2.5 kilometers from the refinery site in Québec.
Mitre Mining has made significant discoveries at the Cristal target within its newly-acquired Cerro Bayo project in Chile, uncovering outcropping silver-gold vein extensions boasting impressive grades of up to 32,849 grams per tonne of silver and 298.6 grams per tonne of gold.
Adam Neumann, the former chief executive and co-founder of WeWork, has recently bid to acquire the bankrupt co-working company for more than $500 million.
Australian Stock Market FAQs
Stock markets in Australia are managed by the Australian Securities Exchange (ASX), headquartered in Sydney. The main indices are the S&P/ASX 200 and the S&P/ASX 300, which track the performance of the 200 and 300 largest stocks by market capitalization listed on the exchange, respectively. The S&P/ASX 200 was launched in April 2000, and it is rebalanced every quarter.
Almost half of the index belongs to the financial sector, with major banks like the Commonwealth Bank of Australia, Westpac or National Australia Bank. The so-called materials sector is also relevant – comprising almost 20% of the weighting in the index – with mining giants such as BHP Group or Rio Tinto. Other important sectors are biotechnology, real estate, consumer staples and industrials.
Many different factors drive the ASX 200, but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual earnings reports the main factor behind its performance. Commodity prices can also affect the index given its significant share of mining companies. Macroeconomic data such as Gross Domestic Product (GDP) growth, inflation, or unemployment data from Australia is also important as they are indicators of the health of the country’s economy and thus the profitability of its largest companies. Global economic conditions may also play a role, particularly from China, as the Asian country is Australia’s largest trading partner.
The level of interest rates in Australia, set by the Reserve Bank of Australia (RBA), also influences the ASX 200 and ASX 300 indexes as it affects the cost of credit, on which many firms are heavily reliant. Generally, when the RBA cuts interest rates (or signals it is going to do it), it is positive for the Australian stock market as it means a lower cost of credit for companies and higher economic growth ahead, likely boosting sales. On the contrary, if the RBA signals that it will increase interest rates, this tends to weigh on the index. As always, there is a caveat: banks. Financial institutions tend to benefit from higher interest rates because they earn more from lending to other businesses, thus boosting their overall income.
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