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The share market wrapped up a fifth straight winning week as optimism over the improving economy lifted consumer stocks, offsetting dips in banks and miners.

The S&P/ASX 200 eked out a rise of ten points or 0.13 per cent today despite soft US leads.

Gains in tech stocks, bond surrogates and consumer-facing companies helped the index recoup some of yesterday’s 27-point setback. Mining stocks declined following a torrid night on metals exchanges.

What moved the market

The benchmark gained 57 points or almost 0.8 per cent for the week, thanks mainly to a post-long weekend jump on Tuesday. The market wobbled yesterday after an unexpectedly hawkish rates outlook from the Federal Reserve rattled Wall Street.

The rally resumed this session as yesterday’s strong jobs report helped the consumer discretionary sector rise for a sixth session. News the unemployment rate fell to 5.1 per cent last month from 5.5 per cent in April points to more spending power in the pocket of the consumer and sharpened expectations wages will respond to tightening labour markets.

“The good news about this is that this will boost household incomes and support spending,” economist Stephen Koukoulas wrote for Yahoo! Finance. The downside for equities is rising inflation could force the Reserve Bank to raise official rates from record low levels sooner than expected.

“It is likely that during 2022, underlying inflation will hit or exceed the mid-point of the RBA’s target. When this happens, it will be clear that a 0.1 per cent official cash rate will be inconsistent with these fundamentals on inflation and wages,” Mr Koukoulas added.

A retail rally saw Harvey Norman climb 2.74 per cent, JB Hi-Fi 2.18 per cent, Premier Investments 1 per cent and Wesfarmers 0.4 per cent.

Kalkine Group CEO Kunal Sawhney said investors should prepare their portfolios for reflation as price pressures build.

“With the US Federal Reserve pencilling in an earlier interest rate increase, investors looking to cash in on the rate hike can ponder on investing in sectors that tend to benefit from higher rates. Stocks of companies belonging to financials, industrials, retailers, and consumer discretionary sectors seem to be good plays amid the potential uptick in interest rates,” he said.

“Smart exposure to bonds can also be evaluated, as they become more appealing when the interest rate surges… The approach should be to actively review your portfolio, stay true to your long-term investment strategy and make smart adjustments when necessary.”

Buyers returned to the market today after US stocks steadied following Wednesday night’s rates tantrum. The Nasdaq Composite rallied 0.87 per cent overnight amid a rotation from cyclical stocks back to growth sectors. The Dow sank 0.62 per cent. The S&P 500 finished near flat.

US futures were positive but off their highs as the Australian trading week wrapped up. S&P 500 futures rose five points or 0.11 per cent.

Winners’ circle

Afterpay spearheaded a 3.5 per cent surge in the tech sector as falling bond yields signalled concerns about inflation were momentarily easing. The BNPL leader rose 6.45 per cent.

Rival Zip Co jumped 9.85 per cent. Megaport gained 4.33 per cent, Nearmap 3.79 per cent and Nextdc 3.68 per cent.

US-facing businesses shone after the US dollar charged higher for a second night. Aristocrat Leisure jumped 3.97 per cent, Transurban 1.15 per cent, CSL 1.09 per cent and Sonic Healthcare 2.11 per cent.  

ResMed climbed 2.7 per cent to a new record. James Hardie also hit a new high, up 2.1 per cent.

Telstra bounced 1.71 per cent ahead of its delisting from New Zealand stock exchange on Monday.

Supermarket Coles rose 0.43 per cent. Rival Woolworths shed 1.57 per cent after shareholders voted to demerge the Endeavour drinks business from the supermarket and the Fair Work Commission instigated legal action against the group over alleged underpayment of staff.  

Bubs surged 29.33 per cent on news US retail giant Walmart will sell its infant formula online from September. Bubs will establish a US subsidiary to spearhead the company’s launch into the US market.

Takeover target Altium firmed despite warning the second half had not been strong enough to make up for a slow start to the year. The software-maker said full-year revenue was now expected to be at or below the lower end of guidance of $190 – $195 million. The share price climbed 3.04 per cent. The company received an unsolicited approach from US multinational Autodesk earlier this month.

REA Group climbed 2.9 per cent to a new high ahead of completing its acquisition of Mortgage Choice. Trade in Mortgage Choice shares was set to be suspended at the end of the session.

BetMakers leaped 12.96 per cent after completing the acquisition of Sportech’s racing, tote and digital business. The assets will provide a bridgehead into the American market.

Doghouse

Mining stocks staggered under a double assault from a surging US dollar (making dollar-denominated commodities more expensive for holders of other currencies) and from Chinese attempts to suppress metals prices by releasing strategic reserves. The US dollar index touched a two-month high overnight after the Federal Reserve indicated it expected rates to rise sooner than the market anticipated.

“If high inflation readings begin to abate in the coming months, commodities may suffer a significant hit as they have been a popular investment vehicle over the last year as investors hedged against inflation,” Kalkine’s Mr Sawhney said.

“In fact, signs of a broader commodity selloff are already evident after the Federal Reserve meeting. US crude futures plunged the most in a month on Thursday. Given this scenario, the market may see financial investors, who have been piling into commodities to guard against inflation, rotating into growth-oriented stocks.”

Newcrest bore the brunt of today’s selling after gold collapsed 4.7 per cent overnight. The leading gold producer fell 2.95 per cent.

Losses among other gold miners were modest relative to the overnight fall in the yellow metal, thanks to a partial rebound this afternoon. Northern Star eased 2.37 per cent, Resolute 0.92 per cent and Silver Lake Resources 1.2 per cent.

A bounce in iron ore cushioned other mining giants from deeper losses. BHP sank 2.45 per cent, Rio Tinto 0.61 per cent and Fortescue 0.84 per cent.

Energy was the session’s worst performer after the rising greenback pulled crude down 1.8 per cent. Santos fell 3.55 per cent, Woodside 2.15 per cent, Oil Search 2.89 per cent and Beach Energy 1.87 per cent.

The financial sector pulled back from yesterday’s four-year peak. CBA dipped 2.1 per cent, ANZ 0.86 per cent, NAB 0.52 per cent and Westpac 0.22 per cent.

Other markets

A mixed session on Asian markets saw the Asia Dow fall 0.84 per cent and China’s Shanghai Composite lose 0.48 per cent, while Hong Kong’s Hang Seng gained 0.53 per cent and Japan’s Nikkei inched up 0.02 per cent.

Oil added to overnight losses. Brent crude sagged 49 cents or 0.67 per cent to US$72.59 a barrel.

Gold bounced $11.20 or 0.63 per cent to US$1,786 an ounce.

The dollar slumped to a two-month low overnight and continued to fade this morning. The Aussie slipped 0.26 per cent to 75.37 US cents.

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