Lending Association

Afternoon update: ASX up 0.6% but faces challenges from falling metal prices

By mid-afternoon, the Australian share market rose by 0.6%, influenced by a positive trend in the US stock market. This surge was driven by expectations of lower interest rates for the year. However, warnings from local mining companies regarding falling metal prices, including copper, nickel, and lithium, limited the overall gains. Tech stocks performed well led by companies like Life360, Block, and Xero. Consumer-related and real estate stocks also saw gains. However, the materials and utilities sectors were in the red.

Heavyweight mining giants such as BHP Group, Fortescue Metals, and Rio Tinto had limited movements, with lithium stocks experiencing significant declines. The big banks, on the other hand, rallied, with ANZ, Commonwealth Bank, National Australia Bank, and Westpac showing positive gains.

Morningstar analyst Nathan Zaia projected a 4% annual growth in banks’ net interest income until fiscal 2026, citing higher net interest margins and loan growth, despite expectations of rising bad debts. In international news, the People’s Bank of China maintained its lending benchmark rates, while there was speculation about potential stimulus measures to boost China’s slowing economy. San Francisco Federal Reserve Bank president Mary Daly suggested that interest-rate cuts were not imminent.

The Australian dollar saw a slight increase to US66.08¢ after a recent decline due to shifts in the global interest rate outlook and weakness in commodities. Crude oil prices also extended losses due to concerns about softening demand. Iron ore futures posted a third consecutive week of losses, settling at $US135.88 a tonne, primarily due to steelmakers’ negative margins.