Industrials and tech stocks lift ASX; Perpetual plunges 7 per cent

The laggards

Shares in Perpetual plunged 7 per cent after the asset manager confirmed it had agreed to sell its trustee and advice business to private equity group KKR for $2.17 billion. The buyout would leave Perpetual as a standalone manager of about $227 billion in assets.

Consumer discretionary companies (down 0.4 per cent) and miners (down 0.1 per cent) were weaker, with JB Hi-Fi losing 1.7 per cent and iron ore heavyweight Rio Tinto shedding 1.2 per cent.

Mercury NZ (down 2.7 per cent), Paladin Energy (down 2.8 per cent) and Spark NZ (down 2.5 per cent) were among the worst-performing large-cap stocks.

The lowdown

Capital.com senior financial market analyst Kyle Rodda said the Australian sharemarket traded mostly flat on Wednesday following a strong rally in the previous session.

“After all the volatility in April, the index, supported by the RBA’s reluctance, rightly or wrongly, to seriously consider interest rate hikes, is within touching distance of record highs,” he said.

Overnight on Wall Street, US stocks held steady following some sharp recent gains.

The S&P 500 Index edged up 0.1 per cent in a relatively quiet trading session following three straight leaps for the benchmark of at least 0.9 per cent. The Dow Jones Industrial Average also added 0.1 per cent, while the technology-heavy Nasdaq Composite Index slipped 0.1 per cent.

The US earnings season is winding down, with the majority of companies beating forecasts for earnings, but they are not getting as big a boost to their stock prices afterwards as they usually do, according to FactSet.

Companies that fall short of profit expectations also have seen their stock prices sink by more the following day than they have historically. That could suggest investors are beginning to listen to critics who have been calling the US equity market broadly too expensive following its record run this year. For stock prices to climb further, profits would either need to grow substantially, or interest rates would need to fall, they say.

Wall Street still considers rate decreases a possibility this year following some events last week that traders found encouraging.

Federal Reserve chair Jerome Powell said the central bank remains closer to cutting its main interest rate than lifting it despite a string of stubbornly high recent readings on inflation. A cooler-than-expected jobs report on Friday also suggested the US economy could pull off the balancing act of staying solid enough to avoid a recession without being so strong that it keeps inflation too high.

Treasury bond yields have been regressing this month to offer some competitive relief for the equity market.

The yield on the 10-year Treasury fell to 4.45 per cent, from 4.49 per cent a day earlier. The two-year yield, which moves more closely with expectations for the Fed, slipped to 4.82 per cent, from 4.83 per cent.

Tweet of the day

Quote of the day

“Australian retailers set the prices … consumer pricing is at the sole discretion of retailers,” said Procter & Gamble, which sells brands such as Olay, Pantene and Gillette, as global food makers push back against allegations of price-gouging and describe supermarkets as the singular gatekeepers of grocery prices.

You may have missed

Australian power giant Origin Energy’s stake in Britain’s Octopus Energy has gained hundreds of millions of dollars in value after the fast-growing UK electricity sector disruptor secured new backing from superannuation funds, including Australia’s Aware Super.

With AP

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.