The ASX 200 hit 10-month highs and came within a whisper of new all-time highs today, gaining 0.76% to end the session at 7,545.8 — within 100 points of the August 2021 high of 7,632.8.
Tracking Wall Street’s gains overnight, all local sectors but Tech traded higher throughout the day to end in the green.
Today’s market strength — on strong trading volumes — is a continuation of the broad-based rally of recent weeks, which has been driven by optimism that interest rates have peaked, both in the US and Australia.
The benchmark index is logging a strong finish to the year, having gained more than 7% in December and 4.3% in the past week. This recent market performance is prompting talk of a new market rally in 2024.
Interest rate sensitive sectors Consumer Staples and Consumer Discretionary led all sectors higher. Wesfarmers (ASX:WES) finished up 1.55% while JB Hi-Fi gained 1.22% and Domino’s Pizza finished 1.36% higher.
A higher crude oil price due to Middle East tensions and disrupted Red Sea shipping supported the energy sector. Woodside Energy was up 1.0% and Karoon Energy added 2.46%.
Bank data points to consumer wariness
Data from NAB today suggests Australians are looking to tighten their belts this Christmas amid ongoing cost of living concerns, with a reported 60% of Australians set to cut their spending habits.
While the bank's consumer survey found that we’ve been opting for cheaper brands and products, research from Commonwealth Bank shows that almost half of us intend to hit the Boxing Day sales, up from 42% last year.
Meanwhile, the Westpac-Melbourne Institute 'Leading Index' rose to +0.30% in November from -0.39% in October. The Index indicates the likely pace of economic activity (relative to trend) three to nine months into the future. November recorded the first positive, above-trend read since mid-2022.
But while the result points to an improvement in momentum, Westpac economists say the November read was affected by one-off boosts. They say while the underlying picture is believed to still be of an improvement, stabilisation is more likely than the beginning of a clear cyclical upturn.
Westpac's Matthew Hassan said: "Despite the latest uptick, recent reads suggest the below-trend growth pace will carry into the first half of 2024.” He added, "There is now little doubt about the economy’s weak performance.”
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