Baby Bunting shares stormed 40.5 per cent higher after unveiling profits that more than quadrupled to $9.5 million over fiscal 2025. The baby goods retailer recorded $521.9 million in revenue, a record high for the business. RBC Capital Markets analyst Wei Weng-Chen said guidance for 2026 was about 12 per cent higher than market expectations.
The laggards
Temple & Webster shed 11.7 per cent, reversing some of its gains of 8.8 per cent yesterday after revealing another set of double-digit growth in revenue and earnings.
Amcor sank 9.7 per cent and Corporate Travel Management shed 5.6 per cent.
Property giant Mirvac slid 0.9 per cent after swinging to a net profit for security holders but reporting a 10 per cent fall in revenue to $2.74 billion.
The lowdown
The local exchange has finished the week 1.5 per cent higher than it started, coming the closest it’s ever been to the 9000-point milestone.
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IG market analyst Tony Sycamore described the five-day streak as a “feat which I believe to be unprecedented over the past decade”.
“Following the ASX 200’s push to fresh record highs every day this week and given the ASX 200’s sensitivity to RBA [Reserve Bank of Australia] rate cut expectations, we expect the ASX 200 to extend its gains towards the next upside target at 9000 in the weeks ahead,” he wrote in a note.
AMP chief economist Shane Oliver said the Australian sharemarket was also encouraged by a positive global lead and a “reasonable” start to full-year earnings reporting season.
“Worst-case trade war scenarios now look less likely; global economic data remains mostly OK; profits are coming in stronger than expected globally and expected to pick up in Australia; the Fed is looking likely to start cutting in September as tariffs impact inflation but by less than feared and the US labour market cools; and other central banks including the RBA are continuing to cut rates,” Oliver said.
Baby Bunting shares soared after it unveiled profits had more than quadrupled.Credit: AFR
But there is a high near-term risk of a correction, he warned, amid stretched valuation, shares being overbought, higher US inflation, and uncertainties around the Russia-Ukraine war.
The Reserve Bank will take a “cautious and gradual” approach to cutting rates, added the chief economist, who predicted the next cuts would be November, February, and May, to ultimately end up at 2.85 per cent.
“Sharemarkets are at risk of a correction through the seasonally weak months of August and September given stretched valuations and risks around US tariffs and likely weaker growth and profits,” said Oliver.
“But with Trump pivoting towards more market friendly policies and central banks, including the Fed and RBA, likely to cut rates further, shares are likely to provide reasonable gains into year on a 6-12 month horizon.”
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Overnight, seven out of every 10 stocks within the S&P 500 fell, though the index edged up by less than 0.1 per cent to set another all-time high. The Dow Jones dipped 11 points, or less than 0.1 per cent, and the Nasdaq composite dipped by less than 0.1 per cent from its record set the day before.
The inflation report said that prices jumped 3.3 per cent last month at the US wholesale level from a year earlier. That was well above the 2.5 per cent rate that economists had forecast, and it could hint at higher inflation ahead for US shoppers as it makes its way through the system.
The data forced traders to second guess their widespread consensus that the Federal Reserve will cut interest rates at its next meeting in September. Lower rates can boost investment prices and the economy by making it cheaper for US households and businesses to borrow to buy houses, cars or equipment, but they also risk worsening inflation.
“This doesn’t slam the door on a September rate cut,” but it may raise some doubt, according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
Traders now see a 7.4 per cent chance that the Fed may hold rates steady in September, according to data from CME Group. A day earlier, they were betting on a 100 per cent certainty that the Fed would cut its main rate for the first time this year.
Higher interest rates drag on all kinds of companies by keeping the cost to borrow high. They can hurt smaller companies in particular because they often need to borrow to grow. The Russell 2000 index of smaller US stocks tumbled a market-leading 1.2 per cent.
Thursday’s disappointing data followed an encouraging update earlier in the week on prices at the consumer level. A separate report on Thursday, meanwhile, said fewer US workers applied for unemployment benefits last week. That’s a good sign for workers, indicating that layoffs remain relatively low at a time when job openings have become more difficult to find.
But a solid job market could also give the Fed less reason to cut interest rates in the short term.
The data helped send Treasury yields higher in the bond market. The yield on the 10-year Treasury climbed to 4.28 per cent from 4.20 per cent just before the data reports’ release and from 4.24 per cent late on Wednesday.
On Wall Street, Fossil Group jumped 29.8 per cent after the seller of watches and other accessories reported better profit than expected. It also announced a plan to strengthen its finances, while trimming its forecast for how much it expects worldwide net sales to fall this year.
Big Tech stocks also helped mask Wall Street’s losses. Amazon rose 2.9 per cent to add to its gains from the prior day when it announced same-day delivery of fresh groceries in more than 1000 cities and towns.
Because Amazon is so huge, with a market value of $US2.45 trillion ($3.8 trillion), the movements for its stock carry much more weight on the S&P 500 than the typical company’s.
In sharemarkets abroad, indexes were mixed across Asia and Europe ahead of a key meeting between US President Donald Trump and Russian President Vladimir Putin on Friday.
With AP
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