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On Tuesday, the Australian sharemarket made a notable recovery from last week’s declines, with the benchmark S&P/ASX 200 Index rising by 0.3%, or 23.8 points, to 8,011.9. This positive shift was driven by impressive performances in the financial and energy sectors, despite ongoing concerns about global oversupply and weakening demand from China.
Financial Sector Hits New Peaks
The financial sector led the market's rebound, fueled by new record highs for major banks. Commonwealth Bank of Australia Ltd (ASX:CBA) saw its share price increase by 0.6% to $143.77, hitting an all-time high of $145.24. This marks a significant 28% gain for the bank this year. Macquarie Group Ltd (ASX:MQG) also experienced a strong performance, climbing 1.6% to $227.36, reaching a fresh peak of $228.50. The stock has surged 24% in 2024.
Westpac Banking Corp (ASX:WBC) and National Australia Bank Ltd (ASX:NAB) also achieved seven-year highs, with shares closing up 1.4% to $32.31 and advancing 0.1% to $38.95, respectively. Australia and New Zealand Banking Group Ltd (ASX:ANZ) fell slightly by 0.4% to $31.40 but remained close to its record high.
The financial sector’s strength was bolstered by news that the Australian Prudential Regulation Authority (APRA) is planning to phase out bank hybrid securities. APRA’s new regulations will require banks to replace these securities with more reliable and cost-effective capital. According to Anthony Ip, a fixed-income portfolio manager at Milford, the changes may benefit smaller banks slightly more than larger ones. A UBS report further supported financial stocks, suggesting that banks might offer better value compared to miners.
Energy Sector Resilient Amid Oil Price Fluctuations
The energy sector also saw gains, despite Brent crude oil prices falling below $72 per barrel due to weak Chinese demand and ongoing global oversupply. Woodside Energy Group Ltd (ASX:WDS) increased by 0.8% to $23.99, and Santos Ltd (ASX:STO) rose 0.6% to $6.92. The energy sector remained buoyant as supply disruptions from Tropical Storm Francine provided some support to oil prices.
Mining Sector Faces Challenges
Conversely, the materials sector faced challenges. Data from China, Australia’s largest iron ore customer, showed a 1.4% decline in iron ore imports in August compared to July, driven by falling steel prices and a pessimistic demand outlook. This data led to a 0.2% drop in October iron ore futures traded in Singapore to $91.60.
In the mining sector, BHP Group Ltd (ASX:BHP) fell 0.3% to $38.66, while Rio Tinto Ltd (ASX:RIO) managed a slight gain of 0.3% to $107.11. Fortescue Metals Group Ltd (ASX:FMG) dropped 2% to $15.89. Market analyst Josh Gilbert from eToro noted that continued struggles in China’s economy might lead to further declines in iron ore prices, potentially impacting miners, especially higher-cost producers.
Stock Performance Highlights
In other notable stock movements, Life360 Inc (ASX:360), a family app provider, saw a sharp decline of 8.1%. Strata insurance brokerage company Steadfast Group Ltd (ASX:SDF) also faced a significant drop of over 10% after media reports suggested the company misled clients by offering more expensive insurance policies from its own subsidiary instead of cheaper alternatives from competitors.
The ASX 200 showed resilience with gains led by financial and energy stocks, individual stock performances highlighted ongoing market volatility and sector-specific challenges.
