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A tentative rebound in iron ore and a profit upgrade from Aristocrat Leisure helped the ASX battle souring US futures to a second day of gains.
The S&P/ASX 200 clung on to an unconvincing rise of nine points or 0.13 per cent after being up as much as 51.5 points.
Pokie-maker Aristocrat and Commonwealth Bank hit all-time highs. The big three bulk metal producers shrugged off Friday’s 10.2 per cent plunge in ore as prices recovered. Macquarie Group was the biggest drag is it traded without the right to a dividend.
What moved the market
The local market hit a session high in the second hour before trimming its advance as US futures suggested lingering concerns over valuations following last week’s blowout inflation print. S&P 500 futures dipped six points or 0.14 per cent. On Friday, the US benchmark recovered for a second straight day, rising 1.49 per cent to trim its loss for the week to 1.4 per cent. The index lost as much as 4 per cent through the first half of the week before the partial recovery.
“Not only are [last] week’s events a warning sign of how uncomfortable inflation prints can become but also a warning sign of how overbought equity markets have become,” Nikolaos Panigirtzoglou, managing director at JPMorgan, wrote.
Here, Aristocrat Leisure scaled news highs after upgrading its first-half earnings and profit. The company said unaudited statutory net profit was expected to be $346 million as normalised net profit increased 12 per cent relative to the prior corresponding period. Normalised earnings increased 6 per cent as conditions in the US improved. The share price rose as high as $40.86 before easing to $38.92, a gain of 4.23 per cent.
The big three iron ore producers steadied with ore prices. Bloomberg reported iron ore futures bounced 2.4 per cent today to US$202.65 a tonne in Singapore trade. Dalian futures rallied 2 per cent. Ore prices hit record levels last week before a sharp reversal as Chinese regulators issued a warning about price gouging and collusion.
Fortescue Metals climbed 1.36 per cent, Rio Tinto 0.49 per cent and BHP 0.06 per cent.
Chinese shares extended gains after April economic data fell short of expectations. Growth in industrial production and retail sales tapered faster than economists expected. The Shanghai Composite climbed 0.697 per cent.
Winners’ circle
Energy giants Ampol and Viva Energy jumped on news the federal government will inject up to $2 billion to keep the nation’s last two oil refineries open until at least 2027. The government will also contribute up to $125 million for Ampol to upgrade its Lytton facility in Queensland to produce ultra-low sulfur petrol. Viva will get a similar package to improve its refinery in Geelong, Victoria. Ampol shares surged 6.09 per cent to a post-pandemic high. Viva shares climbed 7.04 per cent to their strongest since late 2019.
Tech stocks led the US advance, setting up the Australian sector for gains. The Nasdaq Composite surged 2.32 per cent on Friday. Here, Xero rose 5.56 per cent, Altium 1.49 per cent and Appen 1.18 per cent. Afterpay edged up 0.13 per cent.
Crown Resorts improved 0.84 per cent to $13.15 after the board formally rejected an offer of $12.35 per share from US private equity giant Blackstone. The company said the board was still assessing a rival bid from Star Entertainment that values Crown at around $14. Star shares added 0.99 per cent.
Besides Aristocrat and Fortescue, the big movers at the top end were gold miner Newcrest +2.61 per cent and Commonwealth Bank +1.25 per cent. A bright session for gold stocks saw Ramelius rise 7.65 per cent and Resolute add 7.83 per cent.
Doghouse
Half-year profit at fertiliser and explosives firm Incitec Pivot almost halved to $36 million from $65 million amid unplanned manufacturing outages and Covid delays. Pre-tax earnings also fell sharply to $110 million from $159 million in the previous half. The share price slid 1.66 per cent.
“We are well positioned to deliver a stronger second half, with reduced turnaround activity and favourable commodity pricing and conditions in our key agricultural and resources markets,” Managing Director and CEO Jeanne Johns said.
carsales.com dived 10.4 per cent to $17.20 after raising $428 million from institutions at $17. The funds will be used to complete the purchase of US marketplace Trader Interactive. The retail component of the offer opens on Wednesday.
Agribusiness Elders eased 3.43 per cent after declining to offer full-year guidance despite a strong first half. Underlying earnings increased 40 per cent to $73.8 million. Underlying profit rose 41 per cent to $67 million. CEO and Managing Director Mark Allison said the company was well placed to “capitalise on favourable growing conditions and livestock prices”, but costs were expected to increase in the second half.
Nuix skidded 9.51 per cent to an all-time low after Nine Entertainment media raised questions about the data analytics specialist’s governance and accounting practices. The company said its performance and market position were “strong”. Shares that listed at $5.31 and rose as high as $11.85 in January hit $3.06 this morning.
While CBA scaled fresh highs, the other banking majors declined. ANZ shed 0.4 per cent, Westpac 0.31 per cent and NAB 0.65 per cent. Macquarie Group retreated 4.89 per cent as it traded without the right to a dividend. The bank will pay out $3.35 per share on July 2.
Other markets
A mixed session on Asian markets saw the Asia Dow decline 0.22 per cent, Japan’s Nikkei dip 0.99 per cent and Hong Kong’s Hang Seng put on 0.57 per cent.
Gold built on its strongest close since February. The yellow metal climbed $16.90 or 0.9 per cent to US$1,854.60 an ounce.
Brent crude dipped 17 cents or 0.25 per cent to US$68.54 a barrel in choppy trade.
The dollar wilted 0.33 per cent to 77.51 US cents.
