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The ASX closed near a four-week high as takeover interest helped the market break its recent addiction to afternoon fades.

The S&P/ASX 200 finished 23 points or 0.31 per cent ahead at 7355, its strongest close since June 18.

The market has struggled to move beyond 7350 since the start of the Greater Sydney lockdown. Today’s close brought the index within half a percentage point of last month’s record finish of 7386.

Gains in utilities, supermarkets and some of the banks and miners fuelled the advance. Utility investment manager Spark Infrastructure and vitamins maker Blackmores both surged on reported takeover interest. BNPL players plunged on reports of Apple’s entry into the sector.

What moved the market

A mix of takeover fever and gains at the dull but reliable end of the market helped offset a directionless session for the banks and mining majors.

Spark Infrastructure – normally one of the least volatile stocks on the boards – jumped 7.61 per cent in minutes following an Australian newspaper report the electricity infrastructure giant had been approached about a potential takeover offer. Trade was halted mid-afternoon pending a response from the board.

Blackmores was the session’s other standout, rising 6.17 per cent amid speculation the vitamins maker might be the next target of the wave of takeovers sweeping the market. The company’s share price hit a five-year low last year as the pandemic knocked the bottom out of its lucrative daigou trade with China.  

Supermarkets and other stay-at-home stocks rallied after the New South Wales government announced Greater Sydney will stay in lockdown until at least July 30. The state reported 97 new local cases  in the 24 hours to 8pm last night. Victoria reported seven new cases linked to the NSW outbreak.

Coles climbed 1.25 per cent, Woolworths 0.81 per cent and IGA operator Metcash 0.77 per cent. Online retailers also advanced. Kogan gained 3.73 per cent. Temple & Webster added 3.88 per cent.

Buy now pay later players tumbled on news Apple was working on an instalment payment project that would compete with their offerings. The new service, known unofficially within Apple as ‘Apple Pay Later’, would allow consumers to pay for Apple Pay purchases in instalments. Goldman Sachs will partner on the project.

“Local BNPL players appear to be facing a severe test with the entry of Apple into the lucrative space, which could fuel substantial competition in the industry,” Kalkine Group CEO Kunal Sawhney said. “With the launch of Apple’s BNPL product, sector juggernaut Afterpay might no longer remain the only big fish in the ocean.”

Afterpay dived 9.59 per cent, Z1p Co 11.38 per cent and Sezzle 10.26 per cent. Openpay shed 4.92 per cent and Splitit 4.5 per cent.

US stocks retreated overnight after data showed core consumer prices increased last month at the hottest pace in 30 years. The S&P 500 fell 0.35 per cent.

US futures declined ahead of congressional testimony tonight from Federal Reserve Chair Jerome Powell, producer price data and corporate updates from the big banks. S&P 500 futures dropped almost seven points or 0.15 per cent.

“Earnings reports from Bank of America, Wells Fargo, Delta Air Lines, Blackrock, and Citigroup will be in focus tonight,” Kalkine’s Mr Sawhney said. “Investors will be closely taking cues from upcoming earnings reports about how businesses have fared during the COVID-19 recovery and how the rest of the year is expected to unfold for them.”   

Winners’ circle

The materials sector moved back towards the record highs of May, supported by strong Chinese trade data and optimism about demand for raw materials after China’s central bank loosened lending restrictions. The sector has been a strong performer over the last three weeks, rising almost 9 per cent while the broader market tracked sideways.  

Gold miner Newcrest gained 2.58 per cent. BHP added 0.51 per cent. Woodside Petroleum rose 0.39 per cent after US crude hit its highest level since October 2018.

Further down the food-chain. Lithium miner Orocobre closed at a record with a rise of 2.11 per cent. In the gold space, Evolution Mining climbed 4.1 per cent, Silver Lake Resources 3.48 per cent and Ramelius 5.06 per cent. Gold rose overnight as inflation data encouraged hedging against currency moves.

A production beat and soaring copper prices helped Sandfire surpass full-year guidance. The miner generated unaudited sales revenue of $813 million. Managing Director Karl Simich said the result demonstrated the quality of the DeGrussa mine and the strength of copper prices. The share price climbed 2.25 per cent.

NAB edged up 0.08 per cent after confirming media reports it was interested in acquiring Citigroup’s Australian retail business. The bank said it was “in discussions with Citigroup”, but there was no certainty the discussions would lead to a transaction.

News of two new contracts with NBN Co helped lift shares in Downer EDI 0.36 per cent. Downer will provide design and construction services to extend fibre delivery across NSW and WA, as well as provide design and construction services across the national fixed wireless network.

Strength in the US dollar lifted companies with significant US operations. Aristocrat Leisure put on 1.04 per cent, Transurban 1.1 per cent, James Hardie 1.13 per cent and CSL 0.11 per cent.

Business telecom provider Macquarie Telecom surged to an all-time high after reaffirming full-year guidance and announcing plans to expand its Sydney data centre. The new IC3 Super West at the Macquarie Park Data Centre Campus will include a cyber security centre. Shares in the company jumped 15.43 per cent.

Doghouse

Travel stocks finished lower in the wake of the NSW lockdown extension. Flight Centre declined 3.39 per cent, Webjet 2.55 per cent, Sydney Airport 0.51 per cent and Qantas 0.63 per cent.

A mixed session for financial stocks saw ANZ ease 0.61 per cent, Westpac 0.24 per cent and Macquarie Group 0.06 per cent. CBA gained 0.4 per cent.

Humm Group fell 3.96 per cent despite announcing it will be Westpac’s NZ BNPL partner. Humm will partner with Red Bird Ventures, a subsidiary of Westpac NZ, to offer its ‘bundll’ product to New Zealanders using Westpac MasterCard.

Other markets

The ASX was an outlier as Asian markets followed Wall Street lower. The Asia Dow dropped 0.26 per cent, China’s Shanghai Composite 0.5 per cent, Hong Kong’s Hang Seng 0.45 per cent and Japan’s Nikkei 0.25 per cent.

Oil trimmed last night’s advance. Brent crude faded ten cents or 0.13 per cent to US$76.39 a barrel. Gold rallied $3.30 or 0.18 per cent to US$1,813.20 an ounce.

The dollar bounced 0.28 per cent to 74.6 US cents.

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