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A regional rally helped the ASX overcome a rocky start to claim its first advance in three sessions as banks and bond proxies rallied.
The S&P/ASX 200 endured a morning dip into the red before solid gains in the Asia Dow and Japan stiffened sinews. The index ended 58 points or 0.83 per cent ahead at 7055, just 10 points below Monday’s 13-month closing high.
What moved the market
Of the market heavyweights, only Fortescue Metals and Woodside were still in the red at the close following a mid-morning rebound. Afterpay, Brambles and Newcrest were the best of the big guns.
Solid gains in Asia helped offset weak US futures after Wall Street broke a two-session losing run overnight. The Asia Dow climbed 0.92 per cent. Japan’s Nikkei surged 2.2 per cent. Hong Kong’s Hang Seng put on 0.52 per cent. China’s Shanghai Composite eased 0.14 per cent.
US futures wilted with crude oil as doubts persisted over the deteriorating global Covid outlook. India this afternoon reported a record surge in infections: 314,835 new cases in a single day. The grim tally eclipsed the previous world record set by the US back in December.
“It’s just like a tsunami,” a senior consultant at a Mumbai hospital told CNN.
S&P 500 futures trimmed their fall to two points or 0.05 per cent by the Australian market close. Brent crude declined 27 cents or 0.41 per cent to US$65.05 a barrel.
Back home, a survey showed business confidence and conditions ran well above long-term averages last quarter. Both measures strengthened to +17 index points. Profitability, trading and employment also entered expansionary territory. Forward-looking indicators suggested businesses expect further gains in activity and employment in the next three to twelve months.
“The survey suggests that the economic recovery built further momentum in Q1,” NAB chief economist Alan Oster said.
Winners’ circle
A retreat in bond yields channelled fund flows towards traditional bond alternatives. The ten-year Australian yield dropped three basis points this afternoon to 1.654 per cent. Supermarkets Coles and Woolworths rallied 1.73 and 1.51 per cent, respectively. CSL gained 1.81 per cent. Transurban added 1.2 per cent and APA Group 0.59 per cent.
Brambles climbed 2.4 per cent after reaffirming full-year guidance. The supply-chain logistics specialist said it expected underlying profit to improve in the second half as US margins improve.
A two-month high in gold lifted Newcrest 2.25 per cent, Westgold 5.73 per cent and Northern Star 5.21 per cent.
Megaport was the index’s best performer, climbing 9.74 per cent after confirming it expects to reach break even by June. The networking services provider increased monthly recurring revenue by 10 per cent last quarter and revenue by 5 per cent.
The heavily-weighted banks accounted for some of the early weakness before coming good. CBA led the recovery, rising 1.1 per cent. ANZ edged up 0.56 per cent, NAB 0.69 per cent and Westpac 0.52 per cent.
Doghouse
Mining stocks dependent on Chinese demand were mixed after China threatened economic retaliation over the federal government’s decision to scrap Victoria’s Belt and Road deal. Lithium miner Pilbara Minerals fell 10.8 per cent following a broker downgrade. Lynas Rare Earths shed 4.15 per cent and Fortescue Metals 1.3 per cent. Rio Tinto edged up 0.37 per cent and BHP 0.93 per cent.
The abrupt departure of CEO Brett Redman drove AGL Energy to its lowest level in more than 15 years. Redman resigned after 15 years with the company, the last two and a half as chief executive and Managing Director. Chair Graeme Hunt will act in the role until a replacement is found. The business is in the midst of a major restructure. The share price sank 1.66 per cent to a level last seen in December 2004.
News of significant cash outflows helped send AMP down 2.87 per cent to a 12-month low. While assets under management increased by $1.6 billion over the quarter, traders were more concerned by outflows of $1.5 billion from the wealth management business and $1.3 billion from AMP Capital.
Woodside dipped 0.61 per cent in a tough market for energy companies despite raising Q1 revenues by 4 per cent to $1.21 billion. Poor weather helped push production down 2 per cent from the same quarter last year.
Santos also reported a 2 per cent drop in quarter-to-quarter production. The company cited as causes weak domestic gas demand in WA and unplanned maintenance in Papua New Guinea. The share price eased 0.29 per cent.
Australian Pharmaceutical Industries (API) retreated 1.47 per cent after reporting a 29.3 per cent dive in half-year net profit due to the lingering impact of Covid. The Priceline operator reaffirmed full-year guidance.
“These results reflect the impact of pandemic-related lockdown restrictions and lower CBD foot traffic on API’s retail businesses in Australia and New Zealand compared to the pcp [previous corresponding period], which was unaffected by COVID. Priceline Pharmacy’s like-for-like sales were down significantly in its two largest CBDs with Melbourne down by 65% and Sydney down by 51%,” CEO and Managing Director Richard Vincent said.
Redbubble sank 23.05 per cent after the online marketplace warned of a short-term hit to margins as it targets growth. Revenues have increased 85 per cent so far this year, lifting gross profits 100 per cent to $184 million.
Other markets
Gold faded $1.40 or 0.08 per cent to US$1,791.70 an ounce.
The dollar eased 0.09 per cent to 77.47 US cents.
