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Upbeat economic data and a sharp drop in bond yields helped the ASX shrug off weak leads and heavy selling on regional markets amid concerns about a resurgence of Covid-19.
The S&P/ASX 200 bucked the global trend to advance 33 points or 0.5 per cent. Gains in Wesfarmers, CSL, Rio Tinto and CBA helped offset weakness in BHP, Westpac, Woodside and Telstra.
What moved the market
Aussie shares stood firm against a second day of selling in Asia. Bond proxies and tech stocks advanced as the yield on ten-year Australian bonds dived eight points to a three-week low. Today’s decline added to conviction the worst of a month-long “bond tantrum” had passed.
Confidence in the economy was bolstered by a day of positive economic data. Job vacancies – a forward indicator for labour markets – reached a nine-year high last month. Measures of manufacturing and services industry activity improved. Cereal exports hit record highs as both exports and imports increased.
“It looks like another solid trade performance: International trade surplus of $8 billion… for Feb,” economist Stephen Koukoulas said. “Still a worrying lack on imports, reflecting still soggy Capex but export prices are buoyant.”
The data helped soothe investor nerves ahead of the end of federal government job subsidies this weekend. The JobKeeper scheme that cushioned the economy through the pandemic ends on Sunday.
“The big test that lies ahead for the economy is the expiry of the JobKeeper wage subsidy,” CommSec Chief Economist Craig James said. “But all the indicators currently suggest that the expiry won’t represent a road block for the economy – more like a speed bump.”
Asian markets spiralled following a retreat on Wall Street as rising Covid cases cast a cloud over the pace of the global recovery. Overnight, the S&P 500 shed 0.76 per cent and the Nasdaq Composite 1.12 per cent. The Asia Dow slumped 1.81 per cent this afternoon as China’s Shanghai Composite gave up 1.22 per cent, Hong Kong’s Hang Seng 1.9 per cent and Japan’s Nikkei 1.84 per cent.
Winners’ circle
Property giant Goodman Group surged 3.2 per cent to a five-week high as worries about this year’s spike in rates continued to abate. Charter Hall Group put on 2.8 per cent, SCA Property Group 1.6 per cent and Cromwell Property 1.2 per cent.
Funds continued to flow back to bond alternatives punished during this month’s rates storm. Wesfarmers gained 2 per cent, CSL 1.9 per cent and Transurban 0.7 per cent. Supermarkets Woolworths and Coles tacked on 1.6 and 1.2 per cent, respectively.
The tech sector continued to repair. Xero was the sector’s best performer, rising 2 per cent after acquiring Swedish e-invoicing business Tickstar for around $22 million. Afterpay added 0.3 per cent and WiseTech 2.8 per cent.
“The technology space has recuperated a bit that was under pressure when bond yields were rising steeply,” Kalkine Group CEO Kunal Sawhney said. “Falling yields on 10-year U.S. Treasury notes from a 14-month high and repeated reassuring comments from the Fed over inflation concerns are giving a leg up to the sector.”
The largest of the big four banks, CBA, rallied 1.9 per cent, offsetting weakness among the rest. ANZ was flat. NAB dipped 0.4 per cent. Westpac dropped 1 per cent after New Zealand’s central bank ordered independent reports into risk governance and liquidity risk management at the bank’s NZ operations.
Premier Investments climbed 2.7 per cent to a two-month peak after almost doubling its half-year net profit. Record Peter Alexander sales helped lift the fashion retailer’s half-year NPAT by 88.9 per cent to $188.2 million.
Cereals and oils handler GrainCorp rose 6.2 per cent after announcing it expects to generate an additional $25 million in earnings by 2023-24 through using excess port capacity following the demerger of its malting business.
Doghouse
Energy stocks chased the price of crude lower. Brent crude dived 5.9 per cent overnight into a technical correction, defined as a close more than 10 per cent below its peak. Woodside dropped 1.1 per cent, Santos 1.5 per cent and Oil Search 3.1 per cent.
Travel and tourism stocks were lowered by Covid setbacks in Europe, where vaccination programs have fallen short of expectations. Webjet shed 4.6 per cent, Flight Centre 3.1 per cent, Corporate Travel Management 2.6 per cent and Qantas 1.5 per cent.
The big three bulk metals producers were mixed. Fortescue Metals fell 0.3 per cent and BHP 0.2 per cent. Rio Tinto bounced 1.8 per cent. Gold miner Newcrest gained 1 per cent.
Telstra eased for just the second time in nine sessions, falling 0.9 per cent from yesterday’s eight-month closing high.
An index of speculative stocks declined for a fourth straight day. The S&P/ASX Emerging Companies Index eased 1.1 per cent after Wall Street’s small cap benchmark took its biggest hit since June. The ASX Small Ords dropped 0.5 per cent.
Other markets
US futures were mixed but little changed. S&P 500 futures dropped two points or less than 0.1 per cent. Nasdaq futures gained 0.3 per cent.
Brent crude bounced seven cents or 0.1 per cent to US$60.93 a barrel. Gold rallied $7 or 0.4 per cent to US$1,732.20 an ounce.
The dollar dropped below 76 US cents for the first time in seven weeks. The Aussie sank 0.39 per cent to 75.96 US cents.
