The ASX finished higher today, led by a rally in mining shares.
Rio Tinto Ltd (ASX:RIO) jumped 3.6%, BHP (ASX:BHP) Group Ltd gained 2.3% and Fortescue (ASX:FMG) Metals Ltd rose 2%.
These stocks were helped by a bounce in the iron ore price, with Beijing potentially set to support its struggling steel sector.
Copper and silver stocks also benefitted. Manuka Resources Ltd gained 6.2%, while copper explorer South32 Ltd added 2.5%.
Another strong performer was lithium miner Arcadium Ltd, which climbed 4%.
The S&P/ASX200 gained 34.00 points or 0.44% to 7,823.10. The index has lost 0.82% for the last five days but sits 1.10% below its 52-week high.
Top-performing stocks in this index were Liontown Resources (ASX:ASX:LTR) Ltd and Elders Ltd, up 8.61% and 7.40% respectively.
Investors are anticipating the release of crucial US inflation figures, set to be published after the trading session ends. The data is expected to play a pivotal role in determining the timeline for potential interest rate reductions by the Federal Reserve.
Recent robust economic indicators in the US have caused market participants to delay their forecasts for the Fed’s initial rate cut to September, previously anticipated in July. This shift has propelled the yields on 10-year Treasury bonds to their peak level since November.
In response to these developments, market speculators in Australia have adjusted their expectations, with futures now indicating a December timeline for the Reserve Bank of Australia’s first-rate alteration, a month later than previously projected.
Conditions rise, confidence low
NAB put out its monthly business sentiment update, which signalled a resilient economy amid inflation challenges.
There was an uplift in trading conditions and profitability in February, propelling business conditions to surpass their long-run average. However, the retail and construction sectors witnessed further softening, reflecting their heightened vulnerability to the adverse effects of tighter monetary policy. Despite this, the broader business landscape showed signs of resilience.
Nevertheless, business confidence and forward orders have declined, remaining at persistently low levels, while capacity utilisation saw a slight reduction.
Companies reported continued high-cost growth in both labour and material inputs. Yet, with business activity remaining stable, it appears that firms are still able to pass on some of these costs to consumers.
In the retail sector, price growth notably accelerated to 1.4% every quarter, rebounding from a slowdown during the Christmas and New Year period. This indicates that the path to reducing inflation may encounter challenges in the coming months.
“There was an improvement in business conditions in February, taking conditions back above their long-run average,” said NAB chief economist Alan Oster.
“The improvement was led by trading conditions and profitability and unwinds some of the easing we’ve seen in conditions since late 2023 – but it is really too early to say if this is just a temporary lift or the beginning of a more meaningful turnaround.”
“The story at an industry level is really quite mixed with some sectors still very strong and others under a lot of pressure. Conditions look very robust in some of the services sectors such as transport, recreation & personal services and finance, business & property.
"On the other hand, retail and construction both look fairly weak, which reflects direct exposure to the high level of interest rates.
"Business confidence fell 1pt to 0 index points, remaining below average. Forward orders fell 1pt to -3 index points, with retail remaining deeply negative (-29 index points). Capex rose 4pts to +7 index points, while capacity utilisation eased slightly, to 83.4%.
“Confidence remains quite weak, as do forward orders, with retail a long way underwater on both fronts. The softness in these more forward-looking indicators says that firms really are still quite concerned about the outlook for the economy in the near-term.”
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