News World ASX on track for ‘worst month in close to 3 years’
Updated:

ASX on track for ‘worst month in close to 3 years’

The overnight rebound on Wall Street was driven by a strong start to corporate earnings season. Photo: Reuters
Share
Tweet Share Reddit Pin Email

Australian shares have again risen today off the back of Wall Street’s strong trading session overnight, but it’s unlikely to reverse this month’s poor performance.

The ASX 200 climbed 1 per cent this morning, fuelled by gains across most sectors and better-than-expected quarterly earnings reported by a number of businesses in the US.

These earnings prompted American shares to climb between 2 and 3 per cent overnight – Wall Street’s biggest one-day surge since March, and only a week after suffering its worst fall since February.

The improvement in local markets in the last two days is significant, but Commonwealth Bank stockbroking business CommSec said this is set against a less positive backdrop.

“While this is the best daily improvement in four months, local stocks are still on track to have the worst month in close to three years,” CommSec said.

Meanwhile, the Australian dollar has lifted slightly to 71.4 US cents. It is also buying 54.1 British pence, 61.6 euro cents and 80.1 Japanese yen. 

Locally, several major companies will hold their annual general meetings today, including Origin Energy, CSL and Tabcorp. 

‘Buy the dip’ mentality takes hold 

Wall Street’s gains were enough to make investors put aside their concerns about rising interest rates and simmering US-China trade tensions, which led to a rout in global markets last week. 

NAB’s head of foreign exchange strategy Ray Attrill believes the share market rebound was, essentially, due to investors wanting to take advantage of bargains. 

“A ‘buy the dip’ mentality has evidently prevailed serving to push the S&P back above its 200-day moving average,” he said. Around 95 per cent of stocks on the benchmark S&P 500 index posted gains. 

Technology stocks, which drove the recent sell-off, were among the best performers. This led to the tech-heavy Nasdaq index jumping 2.9 per cent to 7,654. The S&P 500 lifted 2.2 per cent to 2,810. 

The Dow Jones index rose 2.2 per cent (or 548 points) to 25,798. Technology, which sold off heavily in the recent pullback, led the gains as all major S&P sectors were positive. The technology sector gained 3 per cent while healthcare rose 2.9 per cent. 

Those two groups have led the S&P 500’s advance this year. In economic news, US industrial production increased for a fourth straight month in September, boosted by gains in manufacturing and mining output, while other data showed job openings hit a record high in August. 

Gold prices were still trading at their highest levels in two-and-a-half months ($US1223 an ounce). 

The price of Brent crude oil rose sharply overnight to $US81.36 per barrel. 

Partly this was due to concerns about disrupted supply from the Middle East in the near future – given the upcoming US sanctions on Iran and growing tensions with Saudi Arabia over the disappearance of journalist Jamal Khashoggi. 

–with ABC and wires