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Commonwealth Bank of Australia (ASX:CBA) share price strength helps market overcome China woes

A post-result bounce in the Commonwealth Bank of Australia (ASX: CBA) share price helped lift the Australian share market on Wednesday, despite renewed worries about a softening Chinese economy, after the Middle Kingdom slipped into deflation.

CBA share price

Chinese data showed consumer prices fell 0.3% in July from a year ago, the first decline since February 2021. Producer prices also retreated for a 10th consecutive month. Deflation is seen as dampening China’s demand for raw materials, and following disappointing Chinese trade figures a day earlier, the data posed queries for investors.

But while iron ore heavyweight Rio Tinto reacted predictably, dipping 61 cents, or 0.5%, to $112.94; BHP Group Ltd (ASX: BHP) gained 18 cents, or 0.4%, to $45.50; and Fortescue Metals Group Ltd (ASX: FMG) edged up 4 cents, or 0.2%, to $21.18. The benchmark S&P/ASX 200 (INDEXASX: XJO) finished up 26.9 points, or 0.4%, to 7338, led by financials and tech stocks, with the broader All Ordinaries (INDEXASX: XAO) index adding 23.7 points, or 0.3%, higher to 7543.4.

Commonwealth Bank gained $2.64, or 2.6%, to $104.85, a day after reporting a record annual profit of $10.2 billion, largely on the back of higher interest rates, and lifted its dividend. The other major banks followed suit, with National Australia Bank Ltd. (ASX: NAB) up 61 cents, or 2.2%, to $28.64; Westpac Banking Corp (ASX: WBC) climbing 36 cents, or 1.7%, to $22.07; and ANZ Group Holdings Ltd (ASX: ANZ) gaining 19 cents, or 0.8%, to $25.43.

Elsewhere in financials, Suncorp Group Ltd (ASX: SUN) disappointed investors with a lower-than-expected dividend. The stock lost 21 cents, or 1.7%, to $13.50. The insurer declared a fully franked final dividend of 27 cents a share, sharply lower than the 40 cents expected by analysts’ consensus. Insurance Australia Group Ltd (ASX: IAG) shed 3 cents, or 0.5%, to $5.95; and QBE Insurance Group Ltd (ASX: QBE) lost 28 cents, or 1.8 per cent, to $15.60.

In other company news, Australia’s biggest funerals business, InvoCare Limited (ASX: IVC), jumped 70 cents, or 5.9%, to $12.48 after its board backed a lower takeover offer worth $1.8 billion, made by private equity TPG Capital, at $12.70 a share.

Coal producer Coronado Global Resources Inc (ASX: CRN) partially bounced back from its 11.6% loss on Tuesday, gaining 7 cents, or 4.8%, to $1.525.

Elsewhere in coal, Whitehaven Coal Ltd (ASX: WHC) added 16 cents, or 2.3%, to $7.14; New Hope Corporation Ltd (ASX: NHC) lifted 12 cents, or 2.2%, to $5.56; Terracom Ltd (ASX: TER) put on 1.5 cents, or 3.8%, to 41 cents; and Bowen Coking Coal Ltd (ASX: BCB) surged 0.9 cents, or 10.7%, to 9.3 cents.

In lithium, producer Pilbara Minerals Ltd (ASX: PLS) eased 3 cents, or 0.6%, to $5.29; fellow producer Allkem Ltd (ASX: AKE) lost 12 cents, or 0.8%, to $14.22; IGO Ltd (ASX: IGO), which mines nickel as well as lithium, added 2 cents to $13.31; and Mineral Resources Ltd (ASX: MIN), which produces iron ore and nickel, gained 40 cents, or 0.6%, to $69.44.

Department store chain Myer Holdings Ltd (ASX: MYR) was also starting on the comeback trail after losing 14.1% yesterday: the stock advanced 2.5 cents, or 4.1%, to 63.5 cents. Jewellery retailer Lovisa Holdings Ltd (ASX: LOV) was among the largest decliners, down 92 cents, or 4.3%, to $20.26 after broking firm Macquarie Group Limited (ASX: MQG) downgraded the shares to ‘neutral’ from ‘outperform,’ and slashed its price target by 38%, to $22.

In energy, Woodside Energy Group Ltd (ASX: WDS) retreated 11 cents, or 0.3%, to $38.29; and Santos Ltd (ASX: STO) slipped one cent to $7.85; but Brazilian-based producer Karoon Energy Ltd (ASX: KAR) gained 3 cents, or 1.4%, to $2.23.

Inflation wait pressures US stocks

In the US, the market’s poor August continued, ahead of tonight’s inflation readout, with the blue-chip Dow Jones Industrial Average sliding 191.13 points, or 0.5%, to finish at 35,123.36. The broader S&P 500 (INDEXSP: .INX) lost 31.67 points, or 0.7%, to 4,467.71, and the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) index slipped 162.31 points, or 1.2%, to 13,722.02.

Tonight our time, the closely watched consumer price index (CPI) figure is forecast to show a monthly increase of 0.2% for July, and a 12-month rate of just 3.3%.

On the bond market, the key US 10-year Treasury yield retreated 1.9 basis points, to 4.014%, while the 2-year yield gained 4.6 basis points, to 4.804%. Gold is trading US$9.63, or 0.5%, lower at US$1,915.94 an ounce, while the global benchmark Brent crude oil grade surged US$1.38, or 1.6%, to US$87.55 a barrel, and US West Texas Intermediate oil eased 20 cents, or 0.2%, to US$84.20 a barrel.

The Australian dollar is buying 65.30 US cents this morning, down from 65.69 US cents at the ASX close on Wednesday.

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