The S&P/ASX 200 Index closed 8 points, or 0.10%, lower at 8,550 on Thursday, reversing modest early gains in a session marked by narrow trading ranges and low volumes. Weakness in the Information Technology (-2.05%), Real Estate (-0.71%) and Industrial (-0.39%) sectors outweighed gains in Health Care (+0.44%), Materials (+0.16%) and Energy (+0.13%).
The IT sector led losses despite gains in US tech shares overnight, with heavyweight Xero Ltd falling 5.26% to A$184.00. The sell-off came after the company announced a US$2.5 billion acquisition of US-based payments firm Melio Payments. While the deal positions Xero as a more significant global software player, investors expressed concern over the acquisition price, potential cash flow dilution, and the integration of a loss-making business.
The Financials sector hit another record high, buoyed by ANZ, which gained 2.20% to A$29.74. Westpac edged up 0.09% to A$34.57, while Commonwealth Bank dipped 0.36% to A$190.71 amid overbought technical indicators. National Australia Bank fell 0.40% to A$39.89 and Macquarie declined 0.41% to A$215.97.
Lithium stocks surged after reports Vanguard had acquired a stake in Pilbara Minerals, lifting its share price 5.62% to A$1.32. Iluka Resources rose 6.88% to A$3.73, Liontown Resources added 2.94% to A$0.70, and IGO Ltd climbed 1.78% to A$4.01.
US economic data stokes rate cut expectations
US equities rose overnight as soft economic data increased the likelihood of earlier and deeper interest rate cuts by the Federal Reserve. Despite a drop in initial jobless claims to 236,000, continuing claims rose to 1.974 million, a new cycle high. First quarter gross domestic product contracted 0.5%, with downward revisions to consumer spending and exports driving the decline.
The US dollar weakened, with the euro climbing to US$1.1742 and the Australian dollar firming to US65.45 cents. Yields fell further following a Wall Street Journal report that Donald Trump may pre-emptively nominate Jerome Powell’s successor, raising fresh questions about the central bank’s independence.
European sharemarkets close higher
European sharemarkets closed higher on Thursday, buoyed by strong gains in defence and mining stocks, which advanced between 3.1% and 3.9% following NATO’s decision to raise defence spending targets.
The pan-European FTSEurofirst 300 index edged up modestly, while London’s FTSE 100 rose 0.2%.
Commodity prices mixed
Base metals rose, with copper futures up 3.1% on supply concerns and aluminium rising 0.5%. Gold futures gained 0.1% to US$3,348 per ounce, while iron ore slipped less than 0.1% to US$94.48 per tonne.
Oil prices edged higher, supported by falling US inventories and seasonal demand. Brent crude rose US$0.05 to US$67.73 a barrel, while US Nymex crude added US$0.32 to US$65.24.
Small caps outperform
The S&P/ASX Small Ordinaries Index rose 0.46% to 3,227.10, outperforming the broader market and closing the past five sessions up 0.31%.
News is trickling in this morning, but you can read about the following and more throughout the day.
- Orthocell Ltd achieved a key milestone in the US$1.6 billion US regenerative medicine market, completing its first US surgery using its flagship nerve repair device, Remplir™.
- Alkane Resources received Foreign Investment Review Board approval for a pending transaction.
- Sprintex Ltd continued its European expansion, receiving a €143,250 (A$256,077) deposit from partner Mest Water.