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The share market advanced as solid gains for blue-chips offset heavy bleeding in speculative pockets of the market after Goldman Sachs called a top in green metals.

The S&P/ASX 200 put on 23 points or 0.32 per cent. Most of the gains came in the closing auction when institutional investors find the volume for large trades.  

A “bigger is best” session saw most of the market heavyweights advance while small caps and speculative stocks declined.  

Fortescue Metals, Telstra and Transurban led the advance of the behemoths. Lithium and nickel miners logged double-digit falls as a two-year rally in battery metals hit a speed bump.

What moved the market

A sharply divided market brought quiet progress for investors in the top end of the market and a sobering session for those betting on the green revolution.

Sixteen of the twenty giants of the ASX 20 rallied, lifting the heavyweight index 1.37 per cent. By contrast, the speculative end of the market as measured by the S&P/ASX Emerging Companies Index skidded 2.24 per cent. The Small Ords dropped 1.7 per cent.

The headline figures masked the scale of the carnage among lithium and nickel miners after Goldman declared the bull market in battery metals over. The investment’s bank analysts tipped lithium prices could lose three-quarters of their value by 2023. The bank predicted the spot price could fall from above US$60,000 tonne earlier this year to US$16,000.

“Investors are fully aware that battery metals will play a crucial role in the 21st century global economy,” analysts Nicholas Snowdon and Aditi Rai wrote. “Yet despite this exponential demand profile, we see the battery metals bull market as over for now.”

The note was issued on Sunday night US time and went unremarked here until US miners lost ground overnight. The results today were jaw-dropping for investors in the green metals cycle.

Ratings downgrades from Credit Suisse added to the pressure. Pilbara Minerals tanked 20.03 per cent after CS cut its rating to ‘Neutral’. Allkem, also downgraded to neutral, fell 15.39 per cent.

Nickel miner IGO shed 11.71 per cent. Liontown Resources dropped 19.08 per cent and Mineral Resources 8.07 per cent. Junior nickel explorer Resource Mining Corporation lost almost a third of its value after announcing plans to drill in Tanzania.

The market took in its stride overnight falls on Wall Street as trade resumed after the Memorial Day long weekend. The S&P 500 dropped 0.63 per cent to its first loss in four sessions.

Investors were also untroubled by news economic growth slowed last month as the reopening boom at the end of last year faded. The economy expanded by 0.8 per cent  in the March quarter, down from growth of 3.6 per cent across the last three months of 2021.

Year-on-year growth was 3.3 per cent, ahead of expectations. The dollar faded 0.16 per cent to 71.71 US cents.

“The recently released GDP numbers will be closely watched by market participants, including the RBA for its interest rate decision next week,” the chief executive of Kalkine Group, Kunal Sawhney, said.

“Financial markets are pricing in another interest rate hike by the central bank in its June policy meeting. Fears loom that continuation of aggressive monetary policy tightening by the central bank could push the economy into recession, potentially weighing on stock valuations.

“However, the reopening of the Chinese economy should alleviate some of the concerns about the Australian economy falling into recession.”

Winners’ circle

The day’s gains were heavily concentrated at the top end of the market. Fortescue Metals climbed 3.23 per cent, Telstra 3.09 per cent and Transurban 2.44 per cent. BHP tacked on 2.33 per cent, Coles 1.54 per cent and Woolworths 1.5 per cent.

In the banking space, Commonwealth Bank put on 2.25 per cent, ANZ 1.08 per cent and Westpac 0.96 per cent.

NAB firmed 0.93 per cent after completing the acquisition of Citigroup’s consumer business. CEO Ross McEwan said the purchase gave the bank “greater scale in unsecured lending and supports investment in new technology”.

Doghouse

Origin Energy slumped 13.72 per cent after commodity price volatility prompted it to scrap its 2023 guidance. The company attributed the decision to “extreme volatility across commodity markets”, which has affected coal deliveries and costs for its Eraring Power Station. FY22 earnings were expected to be in the mid-point of guidance of $1.95 – $2.25 billion.

“There is a very high degree of uncertainty around the range of earnings outcomes for the 2023 financial year. As a result, Origin has withdrawn all guidance for FY2023. Origin will continue to assess the outlook, with a view to providing an update at full year results in August,” the company said.

Growth stocks were pressured by a recovery in bond yields. Zip Co fell 8.74 per cent, PointsBet 12.46 per cent and Telix Pharmaceutical 7.73 per cent.

Mesoblast dipped 2.54 per cent after an uptick in revenues and lower research costs helped reduce its third-quarter loss. Revenues increased 5 per cent to US$2 million. Cash usage declined by 40 per cent to US$15.5 million. The loss for the quarter was US$21.3 million, down from US$26.5 million the previous quarter.

Other markets

A mixed afternoon on Asian markets saw the Asia Dow gain 0.09 per cent and Japan’s Nikkei advance 0.48 per cent. China’s Shanghai Composite dropped 0.61 per cent. Hong Kong’s Hang Seng shed 1.02 per cent.

US futures gave up earlier gains. S&P 500 futures were back at neutral after being up around 0.5 per cent.

Oil also shed initial gains. Brent crude for August delivery was lately flat at US$115.60 a barrel.

Gold slipped US$13.90 or 0.75 per cent to US$1,834.50 an ounce.

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