Market Overview
The S&P/ASX200 index is up today, Following Trump’s China Comments gaining 29.50 points, or 0.35%, to reach 8,408.20 as of 24 January, 4:01 pm AEDT. The index has posted a 1.18% gain over the past five days, but it remains 1.25% off its 52-week high. This upward movement follows positive sentiment from Wall Street, where the S&P 500 set a record closing high.
Figure 1: S&P/ASX200 Performance on 24 January
The Australian dollar has also benefited from market conditions, rising above 63 US cents to a five-week high. This increase came after US President Donald Trump’s remarks regarding a potential deal with China. Trump noted his conversation with Chinese President Xi Jinping had been friendly and suggested he could make a deal with China, which has further boosted optimism for both the Australian and New Zealand dollars.
Top Performers in the ASX200
The standout performers on the ASX today are Premier Investments Limited and Monadelphous Group Limited. Premier Investments leads the way with a 7.41% increase, while Monadelphous follows closely with a 5.05% gain.
Premier Investments saw a significant boost after the company’s shareholders approved its sale of 700+ fashion stores to Myer. Despite a drop in stock price the day before due to shareholder approval, Premier has now surged, finishing the week at $28.62 per share.
Monadelphous, a leading engineering company, has also performed well today. Its stock price jumped by over 5%, following strong investor sentiment and expectations of continued success in the coming quarters. Wesfarmers, known for its Bunnings and Officeworks brands, also performed well with a 3.3% rise after Goldman Sachs upgraded its stock to “buy”.
Aussie Dollar Climbs on Trump’s Comments
The Aussie dollar experienced significant movement, hitting a five-week high of above 63 US cents. This rally follows US President Donald Trump’s recent remarks on Fox News about a potential trade deal with China. Trump mentioned that his conversation with President Xi Jinping was friendly and indicated that he could reach an agreement with China. As Trump expressed confidence in a deal, both the Aussie and Kiwi dollars gained ground, reflecting the market’s optimism regarding the US-China trade relations.
According to currency strategist Sim Moh Siong, if Trump continues to pursue negotiations with China and refrains from imposing tariffs, Asian currencies, including the Aussie and Kiwi, could see further relief.
Premier Investments and Myer Deal
Premier Investments’ approval of the Myer deal has contributed significantly to its performance today. Following the shareholder approval, Premier’s stock has risen by 6.4%. The company’s chairman, Solomon Lew, discussed the tough economic conditions affecting retail sales last year, noting a “blip” in apparel sales figures and the collapse of some rival companies, such as Mosaic. Lew also confirmed his return to the Myer board, part of the ongoing deal.
Meanwhile, Myer shares have increased by 3.8%, reaching $1 a share. While this is a modest increase, it provides a sense of relief for Myer’s beleaguered shareholders.
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Wages Growth and Interest Rate Cuts
The Australian economy may be in for slower wage growth, which could open the door to further interest rate cuts. Capital Economics analyst Abhijit Surya pointed out that job mobility had dropped to a record low in Q4, suggesting weaker labour market conditions. Historically, workers who switch jobs receive higher pay hikes, and this decline in mobility could lead to slower wage growth.
Surya predicts that wage growth will slow further and could fall below 3% by the end of the year. This development may prompt the Reserve Bank of Australia (RBA) to consider lowering interest rates in response to inflationary pressures. The next RBA meeting is scheduled for 17-18 February, and mortgage borrowers will be keenly watching for any potential rate changes.
Sector Performance
The broader ASX sectors displayed a mixed performance, with seven sectors seeing gains and four sectors in the red. The consumer discretionary sector led the way with a 2.18% increase, followed by healthcare (+0.62%) and staples (+0.43%). Real estate, industrials, and financials also posted gains, albeit more modestly.
In contrast, energy stocks experienced a significant decline, down 1.39%, while materials and telecommunications also struggled. Information technology stocks saw a slight dip of 0.32%.
Biggest Gainers and Losers
In terms of individual stock performance, Hutchison Telecommunications (Australia) Ltd was the top gainer, up 12%, followed by Develop Global Ltd (+10.14%) and Imricor Medical Systems Inc (+9.78%). Other notable gainers included Premier Investments (+7.56%) and Monadelphous (+5.26%).
On the flip side, Kogan.com Ltd suffered the largest drop, down 15.05%, followed by Webjet Group Ltd (-8.18%) and Coronado Global Resources Inc (-7.04%).
Wrapping Up!
The ASX 200’s positive movement today reflects broader market optimism, aided by strong performances from Premier Investments and Monadelphous Group. The Australian dollar’s rally, driven by Trump’s comments on China, further supports a sense of confidence. However, concerns about slowing wage growth and potential interest rate cuts remain on the horizon. Investors will continue to monitor these developments closely as the reporting season kicks off next week.