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A resilient share market eked out its first weekly gain in a month as takeover action and unexpectedly strong economic data helped investors look beyond lockdowns in Victoria and Greater Sydney.   

The S&P/ASX 200 edged up 12 points or 0.17 per cent to extend its tally for the week to 75 points or around 1 per cent.

Gains today in Macquarie Group, CSL, Wesfarmers and BHP helped offset declines in the big four banks. BHP and ResMed hit all-time highs.

What moved the market

Soft US leads and Victoria’s return to lockdown ensured a subdued end to a choppy, but gently up-trending week. A bounce in the closing auction lifted the index to its highest point of the session.

A fresh all-time high for the materials sector, and takeover interest in the likes of Sydney Airport, Spark Infrastructure, Blackmores and Australian Pharmaceuticals Industries helped drive the market higher this week. The index closed on Wednesday at its strongest level in four weeks.

Better-than-expected jobs data yesterday confirmed the recovery remained on track. Official unemployment fell to 4.9 per cent for the first time since 2010.

ANZ this afternoon predicted the jobless rate would fall as low as 4.4 per cent by the end of the year despite the impact of lockdowns. The bank expects the rate to fall to 4.2 per cent next year and break below 4 per cent the following year.

“Policy support from both the NSW and federal governments is in place, including some business cash flow payments that are contingent on recipients not laying off workers,” ANZ economist Catherine Birch said.

Kalkine Group CEO Kunal Sawhney said, “It will be interesting to see how the government and central bank’s stimulus payments will save the labour market from the impact of recent COVID-19 lockdowns.

“The sooner lifting of lockdown restrictions and resultant return of normalcy will be crucial towards this end. Moreover, high hopes are attached to the ongoing vaccination programme, which if successful, will alleviate further lockdowns and pave the way for the return of foreign labour into the market.”

It was a torrid week for investors in the Buy Now Pay Later space following the launch of PayPal’s instalment payment plan and news of Apple’s imminent move into an increasingly crowded market.

“This week is one of the worst for BNPL shares,” Kalkine’s Mr Sawhney said. “With PayPal recently launching its Australian BNPL product and Apple eyeing off this booming sector, there are now two more big fishes in the ocean.

“It will be interesting to see whether Afterpay will be able to reap the rewards of its first-mover advantage in the BNPL space or lose its customers to these new big shots. The local BNPL players may need to deliver value beyond mere payments to survive in this competitive landscape.”

Afterpay declined 1.29 per cent today to extend its loss for the week to around 12.5 per cent. Sezzle dipped 0.24 per cent.  Z1p Co bounced 2.75 per cent.

Winners’ circle

Mining giant BHP has provided much of this week’s momentum, rising 0.66 per cent this session to a record. Buying interest has been revived by strengthening commodity prices after Chinese authorities loosed lending conditions at the end of last week to reinvigorate the economy.

Ministerial approval for a lithium mine in WA helped lift Wesfarmers 0.87 per cent. The industrial and retail conglomerate announced a joint venture with a US-listed Chilean chemical company had received the last approval needed for the project at Mount Holland. First production is expected in 2025.

Bond proxies rallied as yields continued to fade. The yield on ten-year Australian government bonds has fallen steadily since peaking near 1.9 per cent in February. The ten-year yield eased another basis point this session to below 1.3 per cent.

Dexus climbed 1.28 per cent, InvoCare 0.84 per cent, Charter Hall Group 0.53 per cent, Goodman 0.6 per cent and CSL 0.93 per cent. Sleep disorder specialist ResMed advanced 0.9 per cent to a new peak.   

Other heavyweight gains included Macquarie Group +1.16 per cent, Fortescue Metals +0.23 per cent and Coles +0.29 per cent.

A profit upgrade lifted property firm Ingenia Communities 0.85 per cent. The group said it expected full-year earnings to be 30 per cent stronger than FY2020, versus previous guidance of 15 – 20 per cent. New home settlements were up 17 per cent on FY2020.

Whitehaven Coal climbed 4.35 per cent to a 17-month peak following an upgraded price target from Citi analysts in the wake of yesterday’s quarterly report.

Doghouse

A decline in iron ore production due to heavy rain in the Pilbara and shutdowns helped pull Rio Tinto down 0.41 per cent. The miner warned shipments would be at the lower end of guidance. Ore production on the Pilbara dropped 9 per cent last quarter from the previous quarter.

Gold miner Evolution fell 5.25 per cent after missing production guidance. The group produced 680,788 ounces of gold for the full year, 2 per cent short of a revised target of 695,000 – 710,000 issued in April. The production miss overshadowed news the company will proceed with the proposed Cowal underground mine in NSW.

AMP dipped 0.9 per cent despite news ASIC was dropping a fees-for-no-service case against the wealth manager’s Financial Planning business. The company said it had amended its processes, apologised to clients and completed remediation.

Drug and device-maker Medical Developments hit a pandemic-era low after warning full-year earnings will include a non-cash charge of $7.5 – $8.5 million. The company’s respiratory business had been impacted by the pandemic, prompting an impairment against intangible assets. The share price fell 5.72 per cent.

The big four banks continued to track a decline in yields. CBA dropped 0.12 per cent, ANZ 0.22 per cent, NAB 0.23 per cent and Westpac 0.32 per cent.

Other markets

A mixed session on Asian markets saw Hong Kong’s Hang Seng overcome early weakness to advance 0.63 per cent. The Asia Dow lost 0.37 per cent, China’s Shanghai Composite 0.32 per cent and Japan’s Nikkei 0.62 per cent.

US futures returned to neutral after reversing early losses. S&P 500 futures were last down less than a point or 0.01 per cent. Overnight, the index dropped 0.33 per cent. Weakness in growth stocks pulled the Nasdaq Composite down 0.7 per cent. The Dow inched up 0.15 per cent.

Oil continued to fade amid demand worries and the prospect a new OPEC+ deal will increase output. Brent crude dipped 18 cents or 0.24 per cent to US$73.29 a barrel.

Gold eased US$2.50 or 0.14 per cent to US$1,826.50 an ounce.

The dollar bounced 0.16 per cent to 74.34 US cents.

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