A broad election-eve rally powered the share market to its first weekly advance in more than a month after China cut a key lending rate.
The S&P/ASX 200 climbed 81 points or 1.15 per cent as investors temporarily set aside concerns about rising costs slowing growth and undermining corporate profits.
The advance ended a four-week losing run. The benchmark rose on four out of five sessions for a weekly gain of 70.5 points or almost 1 per cent.
Tech and mining stocks led today’s advance. Energy was the biggest laggard after Woodside shareholders voted to merge the company with BHP’s petroleum interests.
What moved the market
Investors put yesterday’s bloodbath in the retail sector behind them as Shanghai took the first steps towards reopening and China lowered a key interest rate to stimulate borrowing. Commodity prices and the dollar rebounded.
Equities rose on news Shanghai’s port (the busiest in the world) was processing containers at 90 per cent of pre-lockdown levels. Freight vehicles entering and leaving the city were back to two-thirds of the old normal.
The news sharpened hopes of an easing of the supply-chain issues that have marred recent ASX trading updates. Consumer stocks recouped some of yesterday’s losses. Miners rose on improved prices for iron ore, oil and metals. The battered tech sector extended its recovery from two-year lows.
“It seems investors are busy snapping up beaten-down shares after heavy selling in the share market over the past few weeks. The recent market surrender and subsequent reversal in share prices appear to have tempted investors,” Kunal Sawhney, CEO of research group Kalkine, said.
China’s Shanghai Composite climbed 1.46 per cent after the People’s Bank cut the five-year loan prime rate to 4.45 per cent from 4.6 per cent. The new rate will be applied to new mortgages.
The Asia Dow rallied 1.3 per cent. Hong Kong’s Hang Seng firmed 2.23 per cent. Japan’s Nikkei added 1.33 per cent.
Today’s ASX advance was more remarkable for its weak leads. The S&P 500 faded to a loss of 0.58 per cent overnight as sellers took advantage of early gains. The decline pushed the index to within 1.4 per cent of a bear market.
Australians go to the polls tomorrow with a choice between two major parties offering similar visions for the economy, according to City Index market analyst Tony Sycamore. That means a change of government carries less market risk than at previous elections.
“Unlike the 2019 election where the ALP’s Bill Shorten’s economic policies included controversial reforms to negative gearing, capital gains concession and the treatment of franking credits, this time around the economic policies of the major parties are similar,” Sycamore said.
“The lack of a polarising politician and economic policy in this race, means… that should Anthony Albanese become the 31st Prime Minister of Australia, the markets are unlikely to be too concerned.”
The greatest market risk would be a hung parliament, Sycamore believes.
“In return for their support, independents may insist on policies that are less market-friendly. Examples include the Greens’ economic policies of a 6% wealth tax on billionaires, and a Corporate Super–Profits Tax of 40%. In this event, expect the AUDUSD and the ASX200 to take a short-term hit when they re-open next Monday morning,” he said.
Shareholders in casino group Crown Resorts this morning voted in favour of an $8.9 billion takeover by US investment giant Blackstone. The vote clears the way for the acquisition to proceed if state regulators grant approval. Crown shares edged up 0.16 per cent.
Mydeal.com.au jumped 55.81 per cent after Woolworths launched a bid for a controlling interest in the online retail marketplace. The company entered a binding agreement for Woolworths to acquire an 80 per cent interest and delist the firm.
The offer price of $1.05 represented a 62.8 per cent premium to yesterday’s closing price. Woolworths shares crept up 0.48 per cent.
Other battered consumer staples heavyweights also recouped some of yesterday’s losses. Wesfarmers bounced 1.87 per cent. Coles added 0.39 per cent.
Other majors to advance included Fortescue Metals +3.87 per cent, Newcrest +2.57 per cent and Macquarie Group +2.1 per cent. BHP gained 2.05 per cent and Rio Tinto 1.5 per cent.
IGO shareholders celebrated the first production of battery-grade lithium hydroxide at the firm’s Kwinana refinery by boosting the share price 5.14 per cent.
Final approval for a new round of drilling at Chalice Mining‘s flagship Julimar project lifted the miner’s share price 19.06 per cent. The company said drilling for green metals would commence shortly at high-priority targets at Hartog and Dampier.
Woodside Petroleum declined 3.75 per cent after shareholders voted to merge with BHP’s oil and gas interests. The merger is expected to complete on June 1.
BHP shareholders will receive shares in the “new Woodside”. The merged entity will trade under the name Woodside Energy Group with a new ticker code: WDS.
Johns Lyng Group slumped 3.38 per cent to a nine-month low on news two executive directors reduced their holdings. CEO and Managing Director Scott Didier and Executive Director and COO Lindsay Barber both sold a million shares to “manage their personal asset portfolios”.
The building services group reaffirmed earnings guidance but warned it was still assessing the financial impact of flooding on the east coast. The company’s share price has fallen by more than a third since last month.
AMP dropped 2.19 per cent after CEO Alexis George warned shareholders the investment manager had “much work to do” and was not in a position to resume dividend payments. George told today’s AGM the company was on track to reduce costs by $300 million across the business this financial year.
InvoCare eased 1.23 per cent on news the funeral homes operator faced headwinds last quarter from wet weather on the east coast, shipping delays and rising costs. However, today’s AGM also heard mortality rates were tracking back to long-term trends, increasing funeral volumes.
Westfield operator Unibail-Rodamco-Westfield slumped 8.89 per cent, mirroring similar moves in its European listings overnight. The decline followed heavy selling among consumer stocks in the US and news the shopping centre operator intends to launch the Westfield brand in Madrid, Stockholm and Warsaw.
US equity futures rallied with Asian markets. S&P 500 futures rose 33 points or 0.83 per cent.
Oil and gold unwound some of their overnight gains as the US dollar rebounded. Brent crude declined 50 US cents or 0.45 per cent to US$111.54 a barrel.
Gold firmed US$3.20 or 0.2 per cent to US$1,844.40 an ounce.
The dollar fell 0.1 per cent to 70.35 US cents.