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The share market edged off a two-week low as investors rotated out of banking and energy stocks into defensive sectors.

The S&P/ASX 200 bounced nine points or 0.13 per cent to its first gain in three sessions.

On a busy day for trading updates, shareholders gave out bouquets to property giant Goodman, Covid tester Sonic Healthcare and software company Altium, and brickbats to Aristocrat Leisure, Mineral Resources and BlueScope Steel. Evolution Mining and Treasury Wine Estates rallied on acquisition news.

What moved the market

The share market averted a third straight loss as a decline in long-term interest rates encouraged traders to buy bond proxies. REITs, consumer staples, telecoms and healthcare were the day’s best performers.

Bond markets rebounded overnight, taking some of the heat out of a week-long upward creep in yields. The Australian government ten-year bond yield eased six basis points to 1.81 per cent. The decline kept a lid on lenders, but lifted stocks that attract investment flows when yields weaken.

The major banks struggled for a second day as brokers cut their price targets in the wake of yesterday’s unexpectedly soft Commonwealth Bank quarterly update. The bank warned profit margins were being squeezed by intense competition among mortgage lenders.

CBA shares slid 1.55 per cent after Morgan Stanley said the bank was “operating in a low-growth and competitive market”. ANZ shed 1.29 per cent, NAB 0.69 per cent and Westpac 0.98 per cent.

Energy stocks were another drag after Brent crude dropped below US$80 a barrel for the first time in six weeks. Brent sank 30 US cents or 0.37 per cent to US$79.98 a barrel.

Santos gave up 2.05 per cent, Oil Search 1.89 per cent and Woodside Petroleum 1.7 per cent.

The market overcame weak leads from the US. The S&P 500 dipped 0.26 per cent overnight amid worries about margin pressure on retailers and the rates implications of strong sales.

Winners’ circle

Evolution Mining was the session’s best performer. The share price jumped 9.73 per cent on news the gold miner will buy Glencore’s “world class” Ernest Henry copper-gold mine near Cloncurry for $1 billion. The company will part-fund the acquisition with a private placement in the US.

A bullish full-year outlook lifted property giant Goodman Group 1.79 per cent to a new record. CEO Greg Goodman told today’s AGM a strong start to the year meant the company could forecast growth in operating earnings per security of more than 15 per cent.

Other property stocks to advance included Mirvac +1.81 per cent, SCA +1.77 per cent and GPT +1.37 per cent.

A Covid-fuelled earnings bump lifted Sonic Healthcare 3.03 per cent. The medical diagnostics specialist reported revenues rose 5 per cent over the first four months of the financial year. Earnings increased by 16 per cent. The company said its labs continued to test tens of thousands of people around the world every day for the coronavirus.

Confirmation of a strong start to the financial year boosted Altium 2.98 per cent to a pandemic-era high. Chair Samuel Weiss told today’s AGM the company’s software licences, subscription revenues and renewal rates were all growing well.  The company was targeting revenue growth of 16-20 per cent and an underlying earnings margin of 34-36 per cent.

Shareholders welcomed news Treasury Wine Estates will extend its US footprint by acquiring Napa Valley winemaker Frank Family Vineyards for $434 million. The Australian winemaker’s shares rallied 2.58 per cent.

A modest upgrade to the full-year outlook helped raise Medibank 0.86 per cent. The health insurer told investors it was aiming for at least 3 per cent growth in policyholders this financial year, up from previous guidance of “circa 3%”.

Bond proxies kept the market in positive territory as the banks struggled. Telstra gained 2.01 per cent, Wesfarmers 1.16 per cent and Woolworths 1.11 per cent. CSL put on 1.09 per cent, Coles 0.56 per cent and Transurban 0.66 per cent.

Doghouse

Aristocrat Leisure sank 3.61 per cent after its pursuit of UK wagering software firm Playtech hit another hurdle. Playtech announced a third player had entered the race: JKO Play made a preliminary approach with a view to formulating a takeover offer.

The approach overshadow Aristocrat’s full-year result. The pokie-maker grew full-year net profit 81 per cent to $865 million and reported strong momentum into the new fiscal year. Underlying profit declined 40.5 per cent to $820 million from the previous year’s result, which was inflated by a $1 billion tax benefit.

Mineral Resources eased 2.2 per cent after warning of trading headwinds. The miner told today’s AGM that iron ore prices had more than halved, discounts widened, and operating and labour costs increased.

BlueScope Steel eased 2.03 per cent after reaffirming first-half guidance.

Investors in newly-listed Tissue Repair were left licking their wounds after the biotech’s shares dived 39.57 per cent below the $1.15 listing price to 69.5 cents in one of the worst debuts of the year. The company specialises in technology for treating wounds.

Other markets

Asian markets followed Wall Street into the red. The Asia Dow shed 0.4 per cent, China’s Shanghai Composite 0.13 per cent, Hong Kong’s Hang Seng 1.35 per cent and Japan’s Nikkei 0.74 per cent.

US futures were tentatively positive. S&P 500 futures rose four points or 0.1 per cent.

Gold drifted from last night’s five-month high, falling US$1.40 or 0.1 per cent to US$1,868.80 an ounce.

The dollar steadied, rising 0.03 per cent to 72.7 US cents.

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