A positive mood on Friday lifted the benchmark Australian index, the S&P/ASX 200 (INDEXASX: XJO), by 92.5 points, or 1.3%, to 7,279 points, in its best day since July. That helped push the index to a 1.7% rise for the week.
The broader All Ordinaries (INDEXASX: XAO) rose 99.9 points, or 1.4%, to 7,482.6, to match the 200’s performance, with a 1.7% improvement on the week.
Miners led the market higher, as heavyweights Rio Tinto Ltd (ASX: RIO), BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Ltd (ASX: FMG) surged after the iron ore price pushed to its highest level in six months.
BHP Group Ltd (ASX: BHP)
BHP lifted $1.54, or 3.5%, on Friday, to $45.68, notching a 5.5% gain over the week. Fortescue Metals advanced 81 cents, or 4%, to $21.22, making a gain of almost 10%.
Rio Tinto improved $3.46, or 3%, to $118.91, to be up 6.8% for the week, its biggest weekly increase since November last year.
The big four banks were all higher on Friday, with National Australia Bank Ltd. (ASX: NAB) gaining 37 cents, or 1.3%, to $29.68; Commonwealth Bank of Australia (ASX: CBA) up $1.03; or 1%, to $103.16; Westpac Banking Corp (ASX: WBC) advancing 15 cents, or 0.7%, to $21.77; and ANZ Group Holdings Ltd (ASX: ANZ) adding 10 cents, or 0.4%, to $25.70. For the week, NAB was up 3.1%, CBA gained 2.3%, Westpac was up 2.9%, and ANZ put on 2.3%.
Qantas Airways Limited (ASX: QAN)
Qantas Airways Limited (ASX: QAN) had a good week, which has been rare, of late: the stock gained 2 cents, or 0.4%, on Friday, to $5.61, a gain of 8 cents over the week, or 1.4%.
US stocks rise, but bonds less buoyant
In the US, stocks fell on Friday as investors prepared for the Federal Reserve’s policy meeting.
The blue-chip Dow Jones Industrial Average (INDEXDJX: .DJI) slid 288.87 points, or 0.8%, to 34,618.24; the broader S&P 500 (INDEXSP: .INX) index lost 54.78 points, or 1.2%, to 4,450.32; and the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) Index shed 217.72 points, or 1.6%, to 13,708.33.
For the week, the Dow Jones pushed ahead by 0.1%, but the S&P 500 and Nasdaq both suffered a second straight week of losses, lower by 0.2% and 0.4%, respectively.
In the bond market, yields continued to move higher (that is, prices fell) reflecting a less optimistic view of the economy.
In commodities, crude oil continued its rally, with West Texas Intermediate (WTI), in particular, gaining about 4.6% last week, to its highest close since the beginning of November, at US$90.93 a barrel. Brent crude is at US$93.98 a barrel.
Meanwhile, gold prices were slightly higher, at US$1,923.02 an ounce, capitalising on a slow pullback in the US dollar.
Data flow to continue, led by Fed
It was a big week for economic data.
US consumer price inflation rose by 0.6% during August for a 3.7% annual increase, up from 3.2% a year for July, and its biggest monthly rise for 2023.
The monthly increase in inflation was mainly driven by increases in rent and fuel costs.
The core rate, which strips out food and energy, rose by 0.3%, slightly higher than economists had forecast with the annual rate falling to 4.3% from 4.7% in July.
In a separate report, inflation at the wholesale level rose by 0.7% in August, nearly double the rate forecast by economists. The annual rate, however, was up by 1.6% with the core rate slightly higher at 2.1%. Energy prices were the main contributor to the rise with the energy index surging 10.5%.
The European Central Bank raised its key rate to a record 4.5%, from 4.25%, warning that inflation was “expected to remain too high for too long”.
In Australia, the local employment data for August showed that 64,900 jobs were gained, 62,100 of them part-timers, and the unemployment rate remained steady at 3.7%.
The week ahead brings several central bank rate decisions, headlined by the Federal Reserve, on Wednesday, US time. The Bank of England and the Bank of Japan also step up to the rates plate. According to the CME FedWatch tool, the Fed is widely expected to leave rates unchanged.
The Australian dollar ended the week at a two-week high against its United States counterpart, buying 64.58 US cents. It starts this week at 63.64 cents.
