ASX pares gains as lower oil prices weigh on energy stocks; miners rally

ASX pares gains as lower oil prices weigh on energy stocks; miners rally Updated ,first published The Australian sharemarket jumped at the open, but walked back a lot of those gains within the first hour of trading as losses for energy stocks and banks eroded the strong gains for the market from tech and mining. The S&P/ASX 200 was just up 9.1 points, or 0.1 per cent, at 9154.90 as of 10.51am AEST, having hit 9213 points just after trading started, which was above its 9200.90 all-time closing high in March. The early gains came after Wall Street rallied to records amid soaring company profits and easing oil prices. The ASX jumped 1.4 per cent on Tuesday. The Australian dollar was flat at US70.45¢. The mining heavyweights powered the morning’s gains, with BHP up 2.5 per cent and Rio Tinto up 2.2 per cent as copper - their main future profit driver - advanced to its highest level since mid-May, topping $US14,000 a tonne in London, with traders monitoring ballooning volumes held in the US ahead of an expected decision on an import tariff by President Donald Trump. Gold miners were also stronger. Prices for the precious metal advanced on hopes for an interim deal to reopen the Strait of Hormuz that will ease inflation concerns, prompting traders to pare bets on further Federal Reserve interest-rate increases. Higher rates typically are headwinds for gold, which doesn’t yield investors any interest. Bullion traded near $US4080 an ounce. Qatar said a proposal had been drafted, and both American and Iranian officials sounded hopeful about an agreement to reopen the crucial waterway. Gold producers Northern Star Resources gained 3.4 per cent in early trade, and Evolution Mining added 2.6 per cent. South32, which owns the nation’s biggest silver mine, rose 3.4 per cent and Lynas Rare Earths extended its rally from Tuesday, soaring another 7.3 per cent. Tech stocks were on a tear again, as Wall Street’s euphoria around the boom in artificial-intelligence technology continues, sending stocks of computer chip giants Nvidia, Broadcom and Micron Technology up 2.5 per cent, 6.6 per cent and 7.6 per cent overnight. Local software makers WiseTech Global and Xero gained 3.7 per cent and 1.6 per cent, respectively, AI data centre operator NextDC rose 1.1 per cent and family tracking app Life 360 rallied 5 per cent. The big four banks were spoiling the party though, with CBA falling 2.9 per cent, while Westpac dropped 2.3 per cent and ANZ lost 2 per cent. National Australia Bank slipped 1.8 per cent. It said this morning that former Queensland premier Anna Bligh has been appointed to its board. She previously ran the banking industry’s peak body for eight years. Also on the downside, shares of bottle shop and hotel owner Endeavour fell 1.7 per cent after the company said its underlying net profit for the past financial year slumped 14.7 per cent to $363 million, weighed down by $311 million in after-tax charges for the impending closure of a Melbourne warehouse, restructuring costs, offshoring back-office functions, advisory and consulting fees, and writedowns of the value of vineyards and retail stores. The energy sector was the biggest loser this morning due to another drop for oil prices, which sent Woodside down 3.1 per cent and Santos down 1.9 per cent. Brent crude, the international standard, sank 5.4 per cent to $US79.25 per barrel as hope once again took over from fear in the oil market. It had swung sharply between $US72 and $US102 through July on uncertainty about when the war with Iran would allow oil tankers to freely exit the Persian Gulf again to deliver crude around the world. It’s jerked up and down many times as uncertainty built, receded and then built again, not only week to week but also hour to hour, and analysts warned more swings could still be ahead. “Now that passions have cooled somewhat, perhaps there is a chance a deal can be agreed to,” said Robert Yawger, director of energy futures division at Mizuho Securities USA. “I still expect a bad deal to ultimately get done, which will allow the US to declare some kind of victory, but leave a lot of loose ends, including the nuclear deal.” In the US overnight, the S&P 500 - the benchmark and main measure of Wall Street’s health - shot up 1.8 per cent, topping its prior all-time high set in June. The Dow Jones Industrial Average added 1.7 per cent to its own record set the day before, and the Nasdaq composite jumped 2.6 per cent. Palantir Technologies and Caterpillar helped lead the way after becoming the latest companies to deliver stronger profits for the spring than expected. Earlier, in its first earnings report as a public company, SpaceX said its capital expenditures jumped to $US18.4 billion in the second quarter, up nearly seven times from $US2.8 billion a year ago. The spending overshadowed a 92 per cent increase in revenue to $US7.8 billion. SpaceX also posted a quarterly loss of $US541 million, narrower than the $US1 billion loss in the same period a year ago. Shares sunk by around 8 per cent in after-hours trade. Despite worries about high inflation, the dragged-out war in Iran and a possible bubble in tech stock prices, Wall Street is nearing its latest apex in large part because profits are soaring for companies. Stock prices tend to follow the path of corporate earnings over the long term. Palantir Technologies helped lead the way and soared 29.5 per cent after CEO Alex Karp said its overall revenue leaped 93 per cent in what he called an “otherworldly” quarter. Besides reporting a stronger profit for the spring than analysts expected, the AI company also raised its revenue forecast for the full year of 2026. Caterpillar climbed 5.5 per cent after the heavy-equipment maker likewise reported stronger profit and revenue than analysts expected. It was the first time Caterpillar made more than $US20 billion in sales in a quarter, and CEO Joe Creed said it’s seeing strong order rates and a growing backlog across its main businesses. Caterpillar is also benefiting from the AI boom through increased orders for turbines used to power data centres, among other things. They’re the latest companies to deliver even better profits for the latest quarter than investors expected, following strong results from Amazon, Microsoft and others. Coming into this week, companies in the S&P 500 index were on track to deliver growth of nearly 50 per cent in earnings per share for the spring from a year earlier, according to FactSet. The latest drop in oil prices helped to ease Wall Street’s worries about inflation, which in turn pulled down yields in the bond market, which eases pressure on the overall economy and on prices for stocks and other investments. The yield on the 10-year Treasury fell to 4.63 per cent from 4.70 per cent Monday and from 4.75 per cent at the end of last week. That’s a notable move for the bond market, though it remains well above its 3.97 per cent level from before the war with Iran. Higher yields make it more expensive for all kinds of Americans to borrow money, from homebuyers looking for a mortgage to big companies looking to build AI data centres. In other international markets, indexes rose modestly across much of Europe and Asia. with AP, Bloomberg The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.