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The share market advanced for the fifth time in six sessions as falling bond yields soothed inflation concerns and buyers took Victoria’s snap lockdown in their stride.
A dump in the closing auction trimmed the S&P/ASX 200‘s tally to a slender two points or 0.03 per cent. Earlier, the index advanced as much as 26 points to within 1 per cent of this month’s record close.
The index briefly turned negative after the Victorian government announced a seven-day lockdown to contain a Covid-19 outbreak, but soon regained its footing. Today’s advance extended a week-long recovery since last Wednesday’s four-week low.
What moved the market
The rate-sensitive tech sector rose almost 2 per cent to a three-week high as the ten-year Australian government bond yield fell three basis points to its lowest level since February. Declining yields are a sign the market has become more comfortable with the official central bank line that this year’s upsurge in inflation will be temporary.
The tech sector has been one of this year’s worst performers because of the way growth stocks are valued on future earnings, which analysts discount as the cost of borrowing increases. EML Payments rose 5.17 per cent today, Nuix 4.41 per cent, Megaport 3.15 per cent and Afterpay 1.57 per cent.
Buyers bought a dip in travel and tourism stocks after the Victorian government announced the state will return to lockdown from midnight tonight until midnight June 3. The decision followed another 11 new local cases in the last 24 hours, expanding the latest outbreak to 26 cases.
“Unless something drastic happens, this will becoming increasingly uncontrollable,” Acting Premier James Merlino said.
Airlines cancelled services into and out of Melbourne. Seven News reported Qantas cancelled 15 flights. Virgin Australia scrapped more than 10 services. Qantas shares overcame early weakness to edge up 0.43 per cent. Flight Centre gained 2.82 per cent, Webjet 1.4 per cent and Corporate Travel Management 0.69 per cent.
The market ignored a drop in US futures as most Asian markets retreated. S&P 500 futures fell five points or 0.11 per cent ahead of a slab of potentially market-moving data tonight. The Asia Dow slid 0.33 per cent. Hong Kong’s Hang Seng shed 0.31 per cent and Japan’s Nikkei 0.5 per cent. China’s Shanghai Composite gained 0.16 per cent.
Overnight, US stocks edged higher on diminished volume ahead of the Memorial Day long weekend. The S&P 500 gained 0.19 per cent.
Winners’ circle
Fortescue Metals led a rebound in the iron ore majors, rising 4.95 per cent after ore prices stabilised yesterday. BHP climbed 0.97 per cent. Rio Tinto added 0.95 per cent.
A record quarter lifted ASX 200 newcomer Champion Iron 2.59 per cent. The ore miner announced record fourth-quarter earnings, income and annual production.
Aristocrat Leisure sealed a record close with a rise of 1.14 per cent. Commonwealth Bank broke briefly above $100 before easing 0.61 per cent to $98.97. ANZ inched up 0.14 per cent. Westpac faded 0.69 per cent. NAB shed 0.41 per cent. Macquarie Group sank 0.55 per cent.
AMP shrugged off news of civil proceedings alleging the wealth manager charged thousands of dead customers for insurance and financial advice. The company said it reported the matter to the regulator in 2018, remedied its processes and remediated all affected customer accounts. The share price climbed 8.45 per cent.
Doghouse
Costa Group lost almost a quarter of its market capitalisation after warning currency headwinds and labour shortages will negatively impact this year’s result. The higher Australian dollar would weigh on the fruit and veg grower’s international earnings, while a lack of seasonal workers would impact domestic operations. The share price tumbled 24.1 per cent.
Fisher & Paykel Healthcare declined 5.99 per cent as investors worried that a Covid-fuelled earnings bump will fade. The company said an 82 per cent jump in full-year net profit to $524 million was driven by products used to treat Covid patients. The rollout of vaccines will reduce hospitalisations requiring respiratory support, casting a cloud over the earnings outlook.
Gold miner Newcrest was the worst of the heavyweight drags, falling 3.27 per cent. Transurban declined 1.01 per cent, Wesfarmers 0.22 per cent and CSL 0.09 per cent. Supermarkets Coles and Woolworths shed 0.71 and 0.29 per cent, respectively.
Other markets
Oil retreated with US futures. Brent crude slid 25 cents or 0.36 per cent to US$68.48 a barrel.
Gold regained the US$1,900 level after earlier falling below US$1,893. Gold edged up 20 cents or 0.01 per cent to US$1,901.40 an ounce.
The dollar advanced 0.12 per cent to 77.48 US cents.
