The S&P/ASX 200 (INDEXASX: XJO) managed a small gain on Wednesday, adding 0.1 per cent, as strength in the energy and materials sectors, up 1.1 per cent each, offset losses in property and technology.
The standouts included a rally in shares of fund manager Perpetual Ltd (ASX: PPT), which gained 5.5 per cent, and Rio Tinto Limited (ASX: RIO) which finished 2.4 per cent higher.
Amcor Ltd (ASX:AMC) was one of the largest detractors, falling 4.3 per cent despite reporting a 9 per cent increase in sales for the September quarter. The company reaffirmed cash flow but warned of growing pressure from the strength of the USD.
More importantly though, management confirmed they had passed on some US$400 million in cost increases as the company seeks to protect its profit margin in the face of inflation. The driver was raw material inputs in plastic and food containers. The impact of higher interest rates is now becoming evident with housing financial approvals falling by more than 8 per cent in September, well below the forecast result of 3 per cent growth.
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CSL Limited (ASX: CSL) finished 0.2 per cent lower, following an announcement that the company would be partnering with Arcturus Therapeutics on an influenza platform technology that would cost US$200 million upfront. A key reason is the company’s focus on expanding into mRNA vaccine technology.
Property manager Cromwell Property Group (ASX: CMW) fell 4.8 per cent after forecasting earnings growth of around 11 per cent for the 2023 financial year. Cromwell’s management indicated they remain ‘cautious’ in light of the growing volatility and uncertainty around the economy, but still have $13 billion in development work in hand across 85 individual projects.
Rio Tinto gained more than 2 per cent after the company confirmed their proposal to acquire the Turquoise Hill mine at a price of C$43 per share. The offer is made to those holding the 49 per cent of the company Rio does not own. Finally, Woodside Group Ltd (ASX: WDS) gained 1.2 per cent after announcing an accord with the Japan Bank for International Cooperation that pundits suggest could lead to financial support for the massive Scarborough LNG project.
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The Federal Reserve approved another 0.75 per cent interest rate hike, taking the cash rate to 3.75 per cent after an unprecedented increase this year. Unlike Australia, however, the majority of mortgages are fixed rate, hence these changes will take longer to feed through the economy. Minutes of the meeting suggested the pace of rate hikes are set to slow, yet all three markets fell on the news, led by the Nasdaq, down 3.4 per cent. The Dow Jones outperformed on energy companies, falling 1.6 per cent and the S&P500 fell 2.5 per cent.
The rate hike came as the US economy added another 239,000 jobs in October, while the China’s Hang Seng finished 2.4 per cent higher as Beijing’s lockdown policy is set to come to an end.
Shares in Boeing (NYSE: BA) gained around 6 per cent after the company guided to US$10 billion in free cash flow by 2026 and intentions to return capital via dividends. Finally, chip maker Advanced Micro Devices (NASDAQ: AMD) also outperformed, after management announced that demand for data centre chips had remained strong, delivering a near 20 per cent increase in revenue in the third quarter.
