Shares of REA Group (up 2.7 per cent), insurer IAG (up 2.3 per cent) and AGL (up 2.2 per cent) were among the biggest large-cap advancers.

The laggards

On the losing end, the energy sector (down 0.5 per cent) and industrials (down 0.6 per cent) were weaker, with large-cap Woodside shares shedding 0.9 per cent and petroleum company Ampol down 1 per cent.

Shares of toll roads operator Transurban fell 1.8 per cent and engineering professional services company Worley lost 2.8 per cent.

Sonic Healthcare (down 3.4 per cent), telco Spark NZ (down 2.3 per cent) and toll roads developer Atlas Arteria (down 2.2 per cent) were among the biggest large-cap decliners.

The lowdown

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Critical minerals and rare earths companies benefited from a boost in market sentiment after the government pledged more support for the industry, with new measures to include tax incentives aimed at countering China’s dominance in the sphere.

Economic data released Wednesday also supported the market. It showed wages growth slowed for a second consecutive quarter in March, bolstering hopes it may offset inflationary concerns and help build the case for an eventual interest-rate cut.

However, markets still expect the Reserve Bank to leave the cash rate on hold at 4.35 per cent until May 2025, when the central bank is forecast to deliver its first 0.25 percentage point cash rate cut.

Stocks rose on Wall Street overnight as the Nasdaq Composite Index surged to another record high. The benchmark S&P 500 Index also ended the trading session just short of its own high, set in March.

The late gains closed out a mostly wobbly day of trading as investors reviewed a mixed report on inflation and await a more important inflation update on Wednesday (US time). Stocks have been generally gaining ground this month following a dismal April.

The S&P 500 jumped 0.5 per cent. The Dow Jones Industrial Average rose 0.3 per cent, and the Nasdaq – heavily influenced by technology stocks – surged 0.8 per cent.

The latest inflation update showed prices remain stubbornly high at the wholesale level. The producer price index (PPI) showed that inflation rose in April; however, the report also included a revision lower for the March reading.

The report is the first of two big inflation updates this week that are being closely watched by Wall Street.

“Inflation pressures in the US economy are still substantial and the momentum that built up over the last few years is still rolling along,” said Bill Adams, chief economist for Comerica Bank. “At the margin the Fed will see the April PPI report as another reason to slow-roll interest-rate cuts.”

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Bond yields edged lower, with the yield on the 10-year Treasury slipping to 4.45 per cent, from 4.49 per cent late Monday. The yield on the two-year Treasury fell to 4.82 per cent, from 4.86 per cent.

The bigger test for the market will come with Wednesday’s monthly update on consumer prices, or inflation faced by households. Economists expect the consumer price index to ease to 3.4 per cent in April on a year-over-year basis.

The inflation rate has been persistently high, raising concerns that the Fed could have a hard time taming inflation to its target of 2 per cent.

Investors have been curtailing their expectations for the speed and frequency of rate cuts, with traders now betting on only one or two rate cuts this year, according to data from CME Group.

Fed chair Jerome Powell, at a panel discussion in Amsterdam on Tuesday, said his confidence that inflation will ease is “not as high as it was” because price increases have been persistently hot in the first three months of this year.

Quote of the day

“Shareholders know opportunities don’t come along like this for shareholders that often in the resources sector,” said BHP boss Mike Henry, who has challenged Anglo American’s shareholders to decide the best team to maximise returns after Anglo unveiled a new strategy to sell mines and focus on three key materials – a plan Henry described as a “variant” of BHP’s own takeover proposal.

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With AP

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