Join our daily newsletter At The Bell to receive exclusive market insights
Australian shares surged to fresh 14-month highs, bolstered by upbeat economic data and the prospect of low interest rates for years to come.
The S&P/ASX 200 finished 28 points or 0.39 per cent ahead at 7096 after earlier cracking 7100 for the first time since February 2020. At its peak, the index moved within 75 points of last year’s intraday peak of 7197.2.
The older and broader All Ordinaries index rose 21 points or 0.28 per cent, finishing less than two points shy of a new closing high.
What moved the market
Index heavyweights CSL, CBA and BHP spearheaded the latest up-leg following strong building approvals, gains in bulk metals and confirmation yesterday the Reserve Bank does not expect to raise the cash rate until 2024 at the earliest.
A building boom looks certain to contribute to stronger GDP growth after figures this morning showed approvals jumped a seasonally-adjusted 17.4 per cent in March, following a 20.1 per cent rise in February.
“The total number of dwellings approved in March was the second highest recorded, only exceeded by the November 2017 result,” Daniel Rossi, Director of Construction Statistics at the Australian Bureau of Statistics, said.
Private-sector house approvals increased by 0.1 per cent to a new record, thanks in part to the HomeBuilder scheme.
“HomeBuilder has likely brought forward approvals – but points to a strong rise in home building. Positive for jobs & may help slow house prices,” AMP Chief Economist Shane Oliver tweeted.
Buying interest has picked up this week as two of the big four banks announced increased dividends and the RBA once again dampened concerns rising inflation will force a rate hike. The central bank reiterated yesterday that it does not foresee inflation meeting its target until 2024. Insurer QBE this morning announced it expects to resume dividend payments this year as trading conditions recover.
“Strong market conditions are continuing into 2021 as evidenced by the 8.9% premium rate increase achieved in the first quarter, compared with 7.3% in the first quarter of 2020. Each of our divisions achieved premium rate increases in line with expectations and stronger than the increases recorded in the prior corresponding period,” Chair Mike Wilkins told today’s AGM. Shares in the insurer jumped 4.08 per cent.
A rally in US futures helped offset jitters following a broadly negative night in the US. S&P 500 futures climbed seven points or 0.17 per cent. Overnight, the S&P 500 slumped 0.67 per cent and the Nasdaq Composite lost 1.88 per cent after Treasury Secretary Janet Yellen suggested rates might rise to stop the economy overheating.
Winners’ circle
CBA surged 2.51 per cent to its strongest level in six years as traders rotated out of ANZ following an interim earnings report, and after rival Westpac was charged with insider trading. CBA yesterday acquired health tech platform Whitecoat, furthering the bank’s plans to expand its footprint in the sector.
CSL climbed 2.38 per cent after outlining how the company navigated the hit from Covid to its core business of plasma collection. In a presentation to the Macquarie Australia Conference, the company said it had expanded its operations, increased compensation for donors and invested in advertising/marketing. The company will open 25 new collection centres in the US this financial year and 40 in FY2022.
Bulk metals miners gained momentum as the morning advanced. Buying interest was boosted by gains in iron ore and industrial metals overnight.
“Industrial metals continue to power on amid rising inflation expectations which hit a two-week high, while exchange inventories fell across the board, which provided further support. Investors have been increasingly focused on re-openings and the demand recovery, especially outside of China, which has become more evident of late,” ING commodities strategists Warren Patterson and Wenyu Yao wrote.
BHP climbed 1.1 per cent, Rio Tinto 1.15 per cent and Fortescue Metals 0.26 per cent. Worley put on 2.9 per cent, Iluka 3.83 per cent and South32 0.68 per cent.
Investors in Nearmap endured a rollercoaster ride. Shares in the aerial mapping group bolted 14.56 per cent following a profit upgrade, then entered a trading halt so the company could respond to “potential legal proceedings”. Prior to the halt, the company raised its full-year guidance for the value of annual contracts to $128-$132 million from previous guidance of $120-$128 million.
Amcor hit a five-month peak after raising its guidance to reflect a rebound in demand for packaging. The company lifted its full-year adjusted earnings per share guidance by 14-15 per cent. Shares rallied as high as $15.98 before shaving their advance to 2.73 per cent at $15.81.
Medibank Private rose 1.32 per cent on news the health insurer expects to grow policyholder numbers by 3.5-4 per cent this financial year, up from previous guidance of 3 per cent.
Doghouse
ANZ sank 3.23 per cent as investors sniffed at a 45 per cent surge in half-year statutory profit and a doubled dividend. Cash profit declined 10 per cent. The bank will pay a fully-franked interim dividend of 70 cents per share, twice the last payout.
Westpac finished little changed after another run-in with the regulators, easing 0.12 per cent. ASIC filed civil proceedings against the bank over alleged insider trading relating to interest rate hedging activity during the Ausgrid privatisation in 2016.
Heavy selling in high-growth US stocks overnight left the local tech sector staring down the barrel. Altium declined 2.96 per cent, Afterpay 3.46 per cent, WiseTech 2.17 per cent and Appen 1.27 per cent. Nuix sagged 3.54 per cent to a new low.
Goldminer Newcrest reversed 0.98 per cent. Other heavyweight drags included Goodman Group -0.36 per cent and Coles -0.61 per cent.
Other markets
The Asia Dow advanced 0.19 per cent despite weakness across much of the region. Hong Kong’s Hang Seng eased 0.51 per cent and Singapore’s main index fell 1.07 per cent. Markets in China and Japan were closed for the last day of this week’s holidays.
Oil and gold rallied as the US dollar pulled back from overnight highs. Brent crude jumped 60 cents or 0.87 per cent to US$69.48 a barrel. Gold rose $2.40 or 0.14 per cent to US$1,778.30 an ounce.
The dollar bounced 0.14 per cent to 77.23 US cents.
