Coal miners New Hope (down 1.7 per cent) and Yancoal (down 1.7 per cent) also fell, although the electricity generator Mercury NZ (down 5.1 per cent) and Lottery Corporation (down 3.1 per cent) were also among the biggest large-cap decliners.
Shares in the Bank of Queensland fell as much as 3.7 per cent, before closing down 1 per cent after it announced a $200 million goodwill writedown on a 2007 acquisition.
Senior investment adviser at Shaw and Partners Adam Dawes said the lift in the local bourse on Friday wasn’t a broad-based rally.
“The materials sector was in the green with a kick from the gold price moving higher and staying there in recent days,” Dawes said. “Banks also did all right, with CBA contributing about five of the index points.”
Dawes said the strength in banks could partly be attributed to investors chasing dividend payments. “We’re a month away from dividends being paid by three of the major banks,” he said.
Softness in the country’s biggest company, BHP, was partly a result of the cyclone in WA, which threatened iron ore production in Port Hedland, but Dawes said the mining giant was marginally higher at the close because of a downgrade in the severity of the cyclone.
On Wall Street, all three major US stock indices surged more than 1 per cent, with interest-rate-sensitive megacaps including Apple, Microsoft and Amazon providing the most upside muscle – pushing the tech-heavy Nasdaq up nearly 2 per cent to its biggest one-day percentage jump in nearly a month.
Data released before the bell showed a steeper-than-expected cool down in producer prices and new claims for jobless benefits coming in above consensus. Both signal that the Fed’s hawkish barrage of interest rate rises, which began over a year ago, is working as intended.
The data comes on the heels of Wednesday’s muted consumer price index report, which cemented the likelihood of yet another 25 basis point interest-rate rise after next month’s Federal Open Market Committee policy meeting.
‘It’s still all about the Fed, so it’s really all about inflation.’
David Carter, JPMorgan Private Bank
“Markets rallied today following the lower inflation data this morning, as it’s still all about the Fed, so it’s really all about inflation,” said David Carter, an investment specialist at JPMorgan Private Bank in New York.
“Together with yesterday’s muted CPI data, PPI is also suggesting some slowdown in inflation, which could mean a quick end to Fed tightening.”
Financial markets are pricing in a roughly one-in-three probability that the central bank will press the pause button and let the Fed funds target rate stand in the 4.75 per cent to 5 per cent range, according to CME’s FedWatch tool.
Investor focus now shifts to first-quarter earnings season, which jumps into full swing on Friday when a trio of big banks – Citigroup, JPMorgan Chase and Wells Fargo – report.
“Tomorrow’s bank earnings could give insight into the strength of regional banks and future lending activity,” Carter added. “It will be interesting to see what banks say tomorrow about future economic growth.”
Analysts expect aggregate first-quarter S&P 500 earnings to come in 5.2 per cent below the previous corresponding quarter, a stark reversal from the 1.4 per cent year-on-year growth seen at the beginning of the quarter, according to Refinitiv.
The Dow Jones Industrial Average rose 383.19 points, or 1.14 per cent, to 34,029.69; the S&P 500 gained 54.27 points, or 1.33 per cent, at 4146.22; and the Nasdaq Composite added 236.94 points, or 1.99 per cent, at 12,166.27.
Among the 11 major sectors of the S&P 500, all but real estate ended the session higher. Communication services and consumer discretionary enjoyed the largest gains, both jumping 2.3 per cent.
Delta Air Lines shares fell 1.1 per cent following the company’s first-quarter profit miss. Shares of Harley-Davidson slid 1.7 per cent after the motorcycle maker announced chief financial officer Gina Goetter was leaving the company at the end of April. Groupon jumped 4 per cent after the company appointed Jiri Ponrt to succeed Damien Schmitz as chief financial officer. Netflix rose 4.6 per cent after Wedbush said the streaming platform’s revenue growth of new subscribers could drive up profitability.
Advancing issues outnumbered decliners on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 2.55-to-1 ratio favoured advancers.
The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 69 new highs and 140 new lows. Volume on US exchanges was 10.40 billion shares, compared with the 11.51 billion average over the past 20 trading days.
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