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The share market closed at a ten-week high as blue-chip healthcare, banking and consumer stocks took the lead during a pause in a two-week commodities rally.
The S&P/ASX 200 climbed 52 points or 0.7 per cent to its strongest close since mid-January. The rally extended the index’s advance for the month to 6.9 per cent.
Gains for CSL, Westpac, Telstra and Wesfarmers helped offset declines in energy stocks and miners. The I.T. sector jumped 3.5 per cent as the cost of long-term borrowing retreated.
What moved the market
A positive end to a choppy session on Wall Street and the prospect of a high-spending election-year Federal Budget helped keep the ASX’s winning run intact. The ASX 200 extended its current streak to six sessions. The Australian benchmark has fallen just once in the last ten sessions.
The local market has front-run a recovery on Wall Street as investors discount the economic impact of the war in Ukraine and favour equities as an investment of last resort. Market analysts said a sharp sell-off in fixed income has left professional investment managers with few choices but to channel funds into equities.
“I think anyone has to be impressed with the resiliency of the market and I go back to there is no alternative,” Erin Browne, PIMCO’s managing director and portfolio manager, told CNBC.
“Do you want to invest in bonds when you know that the Fed is raising rates or do you want to invest in equities where you can get some type of dividend return, you can get real earnings growth and it’s gonna give you a comfortable return in your portfolios?”
Overnight, the S&P 500 overcame a mid-session wobble to advance 0.71 per cent. A retreat in energy prices temporarily assuaged inflation worries. The Nasdaq Composite led with a rise of 1.31 per cent as treasury yields backed off a near three-year peak.
Back home, the Federal Government was expected to unveil a voter-friendly budget tonight at a time when consumer confidence has collapsed to an 18-month low. ANZ’s confidence index dipped 0.1 per cent to 91.1 last week as Australians fretted over the rising cost of living. Expectations for inflation climbed 0.4 per cent to 6.4 per cent.
Inflationary pressures have yet to show up in weaker spending, according to the latest data. Retail sales increased by 1.8 per cent last month, twice the rise economists expected.
Winners’ circle
Rates relief lit a fire under borrowing-dependent growth stocks. Polynovo jumped 6.6 per cent, Block 6.82 per cent and Appen 6.69 per cent. Tyro Payments gained 5.71 per cent, Life360 5.06 per cent and Zip Co 4.76 per cent.
Telix Pharmaceuticals bounced 9.88 per cent after securing Orphan Drug Designation from the US regulator for a bone marrow conditioning treatment. The designation means the company now qualifies for various development incentives.
Aerial mapping group Nearmap jumped 16.6 per cent after announcing its largest ever government contract win in North America. The new business will lift annual contract value above $150 million for the first time. The company said it expects the value of the portfolio to finish this financial year at the upper end of guidance.
Crown Resorts climbed 0.87 per cent to a ten-month high after the Foreign Investment Review Board raised no objection to a proposed takeover by US investment giant Blackstone.
Sigma Healthcare firmed 1.26 per cent as an upbeat outlook offset declines in full-year earnings and profit during an infrastructure and software upgrade. The pharmacy chain reported a full-year loss of $7.2 million. Earnings slumped 56.3 per cent to $30 million. The company said it expects to return to profit next year as the investment cycle concludes.
Telstra gained 1.55 per cent after finalising plans for a new structure. The telco intends to divide its business into a new holding company – Telstra Group – sitting atop four separate operations containing different parts of the business. A court hearing and shareholder vote will be needed to complete the restructure.
Elsewhere at the heavyweight end of the market, Wesfarmers climbed 1.83 per cent, CSL 1.43 per cent, Westpac 1.08 per cent and Coles 0.96 per cent.
Speculative interest in the mining sector has revived this week with explosive responses to mining results. A day after Tempest Minerals more than tripled in value, Recharge Metals achieved the same feat.
Recharge shares surged 250 per cent after diamond drilling intersected “significant copper mineralisation” at the explorer’s Brandy Hill South project in WA. Managing Director Brett Wallace described the results as “outstanding”. Meanwhile, Tempest shares dipped 2.38 per cent.
Doghouse
Energy stocks fell after China’s Shanghai Covid lockdown triggered a sharp retreat in crude overnight. Woodside Petroleum dropped 1.06 per cent, Santos 0.25 per cent and Beach Energy 2.13 per cent.
Most of the major miners took a breather after testing multi-month highs. Rio Tinto declined 1.38 per cent. The miner announced it had completed its acquisition of the Rincon lithium project in Argentina from a private-equity group for $825 million.
BHP eased 0.59 per cent, Whitehaven Coal 4.28 per cent and Newcrest 0.33 per cent.
Uniti Group eased 1.69 per cent after a consortium comprising New Zealand asset manager HRL Morrison & Co and Canadian investment manager Brookfield matched a rival bid. The consortium raised its offer to $5 per share, in line with a bid from Macquarie Infrastructure and Canadian pension fund PSP Investments. Uniti shares fell on reports Macquarie might walk away from the bidding war.
Other markets
Most Asian markets firmed. The Asia Dow put on 0.83 per cent, Hong Kong’s Hang Seng 0.45 per cent and Japan’s Nikkei 0.7 per cent. China’s Shanghai Composite declined 0.43 per cent.
S&P 500 futures inched up three points or almost 0.1 per cent.
Oil added to last night’s 6.8 per cent decline. Brent crude dropped US$1.78 or 1.6 per cent to US$110.70 a barrel.
Gold continued to lose ground against a rising greenback. The yellow metal wilted US$17.90 or 0.9 per cent to US$1,921.90 an ounce.
The dollar eased 0.22 per cent to 74.8 US cents.
