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A broad rally carried the ASX to its biggest gain in six weeks as easing lockdown restrictions in Victoria helped investors look past disappointing job numbers.
The S&P/ASX 200 rallied 43 points or 0.58 per cent, its best return since a 99-point jump on August 2. Today’s advance was the index’s fourth in five sessions.
Ten of 11 sectors advanced. Energy, healthcare and financials spearheaded the rally. The bulk metal miners faded with Chinese iron ore prices.
What moved the market
Wall Street’s best night in two weeks encouraged local investors to ignore falls across Asia as China’s second-largest property group lurched closer to default. The S&P 500 rallied 0.85 per cent overnight as broadly positive economic data soothed growth concerns.
The ASX has been in repair mode since last Thursday’s 1.9 per cent dive, the index’s heaviest fall since February. Today’s close was the highest in a week.
Travel and tourism stocks rose after Victoria eased Covid-19 restrictions and New South Wales passed a vaccination milestone. Fully-vaccinated Victorians will be allowed outdoor gatherings of up to five. Permitted exercise time will double, travel radiuses increase and outdoor gym equipment and skate parks reopen. NSW passed the 80% milestone for first vaccination doses.
Qantas edged up 0.37 per cent to a five-month high. Flight Centre gained 0.71 per cent, Webjet 0.67 per cent and Corporate Travel Management 2 per cent.
The market briefly wobbled when the August employment report showed the economy shed almost twice as many jobs last month as economists expected. Total employment declined by 146,300 jobs as NSW, Victoria, Queensland and the ACT endured lockdowns. Economists had predicted a smaller hit of around 80,000.
Despite the setback, the unemployment rate dropped to a 13-year low of 4.5 per cent from 4.6 per cent in July as the participation rate fell. The dollar eased 0.3 per cent to 73.18 US cents.
“Delta has had a huge impact on the August jobs data,” CommSec chief economist Craig James said. “But the main message is that the job market remains tight. Employers are keen to hold on to staff in the current environment. So as soon as lockdowns end across the South East, businesses will be wanting staff back on the premises.”
Asian markets fell amid contagion fears if Evergrande Group defaults on its debts. The Hong Kong-listed giant has liabilities of more than US$300 billion, according to Reuters. The property company’s share price slumped 8.2 per cent today, dragging the Hang Seng down 1.98 per cent.
China’s Shanghai Composite shed 1.02 per cent and Japan’s Nikkei 0.71 per cent. The Asia Dow dropped 0.35 per cent.
Winners’ circle
Energy was the best-performing sector on both sides of the Pacific after oil scored its highest settlement since July. Woodside Petroleum firmed 2.48 per cent, Beach Energy 2.34 per cent, Santos 2.24 per cent and Oil Search 2.09 per cent.
BHP was the best of the mining majors, rising 0.97 per cent as gains in copper and other raw materials helped offset a fresh 2021 low in iron ore. Rio Tinto faded 0.92 per cent and Fortescue 3.2 per cent.
Coal miner Whitehaven rose 2.65 per cent to a 22-month closing high after the Federal Environment Minister approved an extension to the company’s Vickery mine in NSW.
Uranium stocks soared after the price of the radioactive metal added to this month’s 40 per cent surge. The Global X Uranium exchange traded fund (URA) jumped 6.5 per cent in the US overnight to a level last seen in 2014.
Yellowcake prices have taken off due to seasonal restocking and heavy buying by the Sprott Physical Uranium Trust. Several Australian miners and explorers have more than doubled in value this month
Delecta climbed 36.36 per cent this session to a decade high. Toro Energy climbed 16.67 per cent to a level last visited in 2017. Alligator Energy firmed 26.58 per cent, Peninsula Energy 13.33 per cent and Boss Energy 9.68 per cent.
Telstra shares rose 0.51 per cent to a four-year peak after the telco announced plans to strip out $500 million in fixed costs, extend 5G coverage to 95 per cent of Australians and expand its regional coverage. The plan was announced to investors this morning as the T25 strategy to deliver growth.
Myer‘s recovery continued with a return to profit lifting the share price 16.67 per cent to the highest in almost two years. The department store swung to full-year net profit of $51.7 million after losing $13.4 million last year. Total sales increased 5.5 per cent.
Wesfarmers gained 0.58 per cent after increasing its offer for pharmaceutical wholesaler Australian Pharmaceutical Industries (API). The retailer raised its bid to $1.55 per share from $1.38, prompting the API board to state its intention to recommend the offer in the absence of a superior bid. API shares soared 16.14 per cent to $1.475.
Brambles rose for the first time since Tuesday’s poorly-received forward outlook, adding 0.82 per cent.
Doghouse
Appen eased 3.84 per cent as growth stocks underperformed. WiseTech dropped 1.77 per cent, Z1p Co 1.19 per cent and EML Payments 1.55 per cent.
Engineering services provider Worley lost 2.3 per cent after major shareholder Jacobs Engineering sold its stake. Jacobs sold its 9.85 per cent holding through a block trade agreement with Citigroup.
Domain Holdings closed flat after acquiring property data business Insight Data Solutions for $60 million in cash. The company said the acquisition extended its reach into the government sector. IDS expected to deliver revenue of $7 million this financial year.
Among stocks trading ex-dividend, Seven Group gave up 0.57 per cent, SkyCity Entertainment 2.19 per cent and Spark NZ 2.73 per cent.
Other markets
S&P 500 futures dipped four points or 0.1 per cent as Asian markets declined.
A rally in oil stuttered. Brent crude was last up two US cents or less than 0.1 per cent at US$75.50 a barrel.
Gold faded US$7 or 0.4 per cent to US$1,787.80 an ounce.
