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Travel and tourism stocks helped steer the market to its highest in a week as US futures climbed and the New South Wales Government mapped the road out of lockdown.  

The S&P/ASX 200 rallied 42 points or 0.57 per cent to its fourth gain in five sessions.

Airlines and travel agents led the advance, with heavyweight support from banks and miners. Growth stocks and bond proxies declined in the wake of last week’s jump in yields.

What moved the market

The market put on as much as 74 points in morning trade as investors looked ahead to the reopening of the eastern states. The NSW government unveiled a three-stage plan to exit lockdown.

The state will start to ease Covid-19 restrictions when double-dose vaccination figures pass 70 per cent (projected to be October 11), open further on the Monday after the state hits 80 per cent (one – two weeks later) and reopen to the unvaccinated on December 1.

The Victorian Government said it hoped to reach its double-dose targets ahead of schedule. Current projections are for the state to reach 70 per cent by October 26 and 80 per cent by November 5.

“In Australia, ‘Freedom Day’ is getting closer,” NAB Head of FX Strategy Ray Attrill said.

Several travel and tourism companies hit pandemic-era peaks. Qantas rose 2.84 per cent to its strongest since February 2020 after bringing forward its flight resumption plan between Victoria and NSW by almost a month to November 5. Flight Centre soared 7.48 per cent, Webjet 5.21 per cent and Corporate Travel Management 3.12 per cent.

Hopes for a positive end to a losing month were sharpened by a rally in US equity futures. S&P 500 futures firmed 24 points or 0.53 per cent, hinting at a positive start to tonight’s trade.

The major US indices finished mixed but little changed on Friday. The S&P 500 and Dow rose 0.15 and 0.1 per cent, respectively. The Nasdaq eased 0.03 per cent.

Australia was playing catch-up after Wall Street broke a three-week losing run. The Dow and S&P 500 ended 0.5-0.6 per cent ahead for the week. In contrast, the ASX 200 lost 0.8 per cent, extending a month-long run of declines.

Winners’ circle

A spike in lending rates last week helped lift Commonwealth Bank 2.84 per cent to its highest in seven weeks. ANZ firmed 1.3 per cent, NAB 0.84 per cent and Westpac 0.83 per cent. The yield on ten-year government bonds jumped above 1.4 per cent last week for the first time since early July.

A third day of rebound gains for iron ore helped lift most of the major producers further from last week’s multi-month lows. Fortescue Metals rallied 2.67 per cent. Rio Tinto added 1.15 per cent. BHP finished flat. Woodside Petroleum firmed 3.2 per cent as oil neared a fresh three-year high.

Australian Pharmaceutical Industries (API) rose 3.07 per cent to a 17-month peak after Sigma Healthcare topped Wesfarmers’ bid for the pharmacy giant. Sigma offered a mix of cash and scrip valuing each API share at $1.57. Wesfarmers offered $1.55 per share earlier this month.

Under Sigma’s “conditional, non-binding indicative proposal”, API shareholders would emerge with 48.8 per cent of the merged company, plus 35 cents cash per share. Sigma shares firmed 1.68 per cent. Wesfarmers inched up 0.21 per cent.

Ampol added 0.43 per cent after securing another two weeks to thrash out a takeover of New Zealand’s Z Energy. The original four-week window to carry out due diligence has been extended.  

Kiwi dairy company Synlait rallied 7.14 per cent on news former Fonterra senior executive Grant Watson will join as CEO. The company said it expects a rebound in profitability this year after full-year net profit collapsed 138 per cent in FY21 to a record loss of NZ$28.5 million.

Construction group Cimic gained 1.01 per cent after securing a multi-year contract to provide engineering and maintenance to BP fuel terminals across Australia.

Doghouse

Healthcare and technology – two sectors that prosper when bond yields are low – were the day’s biggest losers. Health heavyweight CSL shed 1.84 per cent and Fisher & Paykel Healthcare 2.07 per cent. Afterpay eased 1.95 per cent, Nextdc 3.61 per cent, Megaport 2.88 per cent and Appen 1.45 per cent.

Other bond proxies to lose altitude included Atlas Arteria -1.51 per cent, AGL Energy -1.34 per cent, Omni Bridgeway -0.57 per cent and Woolworths -0.59 per cent.

The uranium sub-sector retreated in the wake of sharp falls in US peers on Friday. Pepinnini Minerals dropped 15.45 per cent, Toro Energy 15.15 per cent, Elevate Uranium 12.7 per cent and Paladin 7.83 per cent.  

Other markets

A mixed session on Asian markets saw Hong Kong’s Hang Seng rise 0.59 per cent, Japan’s Nikkei fade to flat and China’s Shanghai Composite retreat 0.63 per cent.

Oil rose for a fifth session. Brent crude climbed 97 US cents or 1.26 per cent to US$78.20 a barrel.

Gold rallied US$6.90 or 0.39 per cent to US$1,758.60 an ounce.

The dollar firmed 0.27 per cent to 72.84 US cents.

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