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The share market overcame mixed Chinese economic data and a mid-session slump to secure a new 13-month closing high and a fourth straight winning week.
The S&P/ASX 200 reversed from a loss of 28.5 points to a post-closing-auction gain of five points or 0.07 per cent. The rebound boosted the index’s weekly tally to 68 points or almost 1 per cent. The broader All Ordinaries climbed eight points or 0.11 per cent to a second-straight record close.
Advances in Newcrest, Rio Tinto, BHP and CSL outweighed declines in Woodside, Fortescue and most of the banks.
What moved the market
A morning of profit-taking gave way to an afternoon recovery in anticipation of potential gains next week following record closes on Wall Street. The S&P 500 and Dow rallied to all-time highs overnight as the first week of the first-quarter earnings season settled nerves about extended valuations.
“Earnings season has certainly received an encouraging start with the US banks – JPMorgan Chase, Wells Fargo and Goldman Sachs – reporting bumper first-quarter profits that blew past analysts’ forecasts. Thanks to robust trading revenue and economic recovery hopes, which enabled these banks to liberate reserves held against potential loan defaults,” Kalkine Group CEO Kunal Sawhney said.
“Along with the major banks, companies like Citigroup, BlackRock and PepsiCo have not failed to surprise the markets with their huge earnings beats.”
The ASX hit its low shortly after the midday release of mixed Chinese economic reports, recovering as the Shanghai Composite rallied 0.86 per cent. Record Chinese GDP growth of 18.3 per cent year on year fell slightly short of expectations
“The apparent strength of these figures relies on powerful base effects from last year’s first quarter (-6.8%YoY in 1Q20). A slight difference in GDP levels estimates results in very different %YoY outcomes, so it is not appropriate to get overwhelmed by what looks like a high growth data release,” Iris Pang, ING’s Chief Economist for Greater China, said. “The high GDP growth in 1Q21 will not persist over the rest of the year,” she added.
Winners’ circle
A seven-week high in gold lifted the index of local miners to its strongest level since mid-February. Evolution Mining gained 4.3 per cent, Newcrest 3.24 per cent and Silver Lake Resources 3.36 per cent.
The wider mining spectrum was mixed, with gains of 0.99 per cent for Rio Tinto and 0.51 per cent for BHP offset by a drop of 0.62 per cent in Fortescue Metals.
The fall in bond yields lifted some traditional surrogates, but by no means all. Goodman Group put on 1.55 per cent, Centuria REIT 2.94 per cent and Charter Hall Group 2.39 per cent. APA Group climbed 0.2 per cent. AGL Energy sank 2.03 per cent to a new 16-year low.
Pharmaceutical group Mayne hit its highest level in 18 months after US regulators approved its contraceptive pill. Nextstellis will launch in June following the Food and Drug Administration’s stamp of approval. Mayne’s share price jumped as high as 59 cents before paring its advance to 10.87 per cent at 51 cents.
A well-received trading update pushed Eagers Automotive back towards all-time highs. The car dealership said “strong market dynamics” helped it record an underlying pre-tax profit of around $98 million for the first three months of the year. Shares climbed 2.37 per cent.
Engineering firm Monadelphous rallied 5.93 per cent after reaching a settlement with Rio Tinto over a fire at Rio’s iron ore processing facility in Cape Lambert.
Doghouse
Most of the banks retreated as Australian bond yields followed US counterparts lower. (Lenders benefit from higher interest rates through the opportunity to increase their margins.) Westpac eased 0.71 per cent, ANZ 0.35 per cent and NAB 0.45 per cent. CBA edged up 0.09 per cent. The Australian ten-year yield dropped almost five basis points to 1.674 per cent, near its lowest level in a week.
Telstra finished flat after losing a court battle over phone booths with digital advertising displays. The High Court ruling stymied the telco’s plans to install 1,800 of the units across the country.
Oil companies were unmoved by a fourth straight advance in crude. Woodside slipped 1.15 per cent, Oil Search 0.99 per cent and Santos 0.42 per cent.
Origin Energy sank 8.94 per cent after an arbitrator awarded Beach Energy a higher wholesale gas supply price than Origin anticipated. Origin said the new price was “materially above Origin’s expectations” and would increase the company’s cost of supply by $30-40 million this financial year. Beach shares climbed 4.64 per cent.
A transport downgrade prompted by a shortage of drivers dragged Mineral Resources down 5.29 per cent. The mining services contractor lowered its full-year iron ore shipment guidance to 17.4-18 wet metric tonnes, citing haulage constraints following border closures.
Brambles dipped 0.75 per cent after completing the merger of its Kegstar keg rental business with US supplier MicroStar.
Other markets
US futures retreated despite gains in Asia. S&P 500 dropped three points or 0.08 per cent. The Asia Dow edged up 0.1 per cent. Hong Kong’s Hang Seng gained 0.78 per cent and Japan’s Nikkei 0.13 per cent.
Oil extended a fourth night of gains. Brent crude rose 34 cents or 0.51 per cent to US$67.28 a barrel. Gold declined 30 cents or 0.02 per cent to US$1,766.50 an ounce.
The dollar backed down 0.11 per cent to 77.43 US cents.
