“At the moment we’ve got inflation coming down and the US not tumbling into recession so far,” said David Bassanese the chief economist at Betashares.
“So, it’s trading as if the US is going to manage a soft landing and until the data proves otherwise, it’s reasonable for the markets to do what they’re doing because it’s true inflation is falling and the [US] economy has not yet tipped into recession.”
Tech was the ASX’s best-performing sector, gaining 3.2 per cent and helping lift the S&P/ASX 200 Index 0.1 per cent, or 9.9 points to 7511.6 points. It’s now 1.6 percent shy of an intraday record high of 7632.8 points from August 2021.
Shares in $146.8 billion blood products and flu vaccine giant CSL also hit a 52-week high of $304.98 to help the healthcare sector add 1 percent.
The gains were offset by falls in the energy and materials sector as blue-chip miner BHP Group lost 1.4 percent.
Mr Bassanese said he was unconvinced equity investors are out of the woods given the US Fed is treading a fine line between avoiding a recession and slowing the economy to cap inflation.
“I still think it will be hard for wage inflation to fall without the unemployment rate going up,” he said. “So the market’s trading on the basis it’s going to be a soft landing because the data at the moment isn’t countering that.”
Company news
Shares in investment group Pinnacle Investments dropped 2.7 percent to $9.39 after saying its $30.5 million interim adjusted net profit came in below analysts’ consensus forecasts of $34 million.
The profit dipped on rising investment costs in Pinnacle’s principal business and affiliates, with CEO Ian Macoun telling investors he made “no apology” for the investments he expects will crank future profit growth.
Pinnacle’s total funds under management across its 15 affiliated investment managers fell 1 percent to $83.2 billion as of December 31 from $83.7 billion last June 30.
The Australian Stock Exchange also flagged a board shake-up with two new potential directors and two retirees after a string of operating failures culminated in it conceding it wasted up to $255 million on its failed CHESS-replacement project.
In other news, online gambling group Betmakers scrapped plans to pay gaming entrepreneur Matt Trip a $15 million bonus after the ASX probed whether the compensation was a personal favor from the company’s then-CEO.
The group made the disclosure three days after announcing a board and executive shake-up, including demoting the CEO Todd Buckingham.
Elsewhere, Commonwealth Bank economist Gareth Aird said the US Fed’s move would not sway the Reserve Bank and predicted a 25 basis point increase to rates – in line with the market’s consensus – at its monetary meeting next Tuesday.
“We believe if the RBA delivered an outsized hike of 40bp in February it would be coupled with a stated expectation from the board to keep the cash rate on hold over the period ahead while it assesses the impact of the cumulative rate increases,” Mr Aird said.
In London later in the day, the Bank of England is tipped to deliver its 10th consecutive interest rate increase by lifting borrowing rates 50 basis points to 4 percent to their highest level since 2008.
In the cryptocurrencies space, risk bellwether bitcoin topped $US24,000 at its highest since August. The world’s No. 1 digital token has erased all its losses since the bankruptcy of crypto exchange FTX in November.