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The post-pandemic recovery passed another milestone today as strong jobs data helped the All Ordinaries be the first of the major indices to a new high.
The older of the two Australian benchmarks rallied 37 points or 0.5 per cent to crack 7300 for the first time in its history. The index finished at 7317.5 after earlier flying 41 points past its February 2020 peak.
The S&P/ASX 200 advanced 36 points or 0.5 per cent to 7058.6. The more-commonly-quoted of the two indices closed 139 points from last year’s record.
What moved the market
The market reversed early declines after the March jobs report underscored the scale of the recovery since last year’s mass job losses. The unemployment rate ticked down to 5.6 per cent from 5.8 per cent in February as almost 71,000 Australians found work. The drop left the official jobless rate just four basis points above where it sat at the start of the pandemic. The number of hours worked last month was stronger than pre-Covid amid record-high participation.
The mining states of WA and Queensland led the rebound, thanks in large part to a post-Covid surge in demand for commodities. Sarah Hunter, economist at BIS Oxford Economics, told the ABC both states were “now operating well above their pre-COVID levels”.
“The recovery in mining investment and, in Queensland’s case, an increase in interstate migration have resulted in their economies out-performing the rest of the country,” she said. “In contrast, NSW, Victoria and now SA have seen employment plateau at or below its pre-COVID level.”
Overnight strength in industrial metals ensured mining stocks led today’s advance. BHP rallied 2.87 per cent, Fortescue Metals 3.51 per cent and Rio Tinto 2.96 per cent. Champion Iron added 5.2 per cent.
The market’s early weakness followed a broadly negative session in the US, where a skinny 0.16 per cent rise in the Dow was outweighed by declines of 0.41 per cent in the S&P 500 and 0.99 per cent in the Nasdaq.
US futures recovered this afternoon despite a mixed session in Asia. S&P 500 futures advanced nine points or 0.23 per cent. The Asia Dow inched up 0.16 per cent. The Shanghai Composite slumped 0.77 per cent and the Hang Seng 0.87 per cent amid liquidity and debt worries. Japan’s Nikkei was barely changed at +0.01 per cent.
Winners’ circle
The financial sector reversed early losses to extend yesterday’s 13-month closing high. CBA gained 0.13 per cent, ANZ 0.1 per cent, NAB 0.45 per cent and Westpac 0.67 per cent. Macquarie Group put on 1.64 per cent.
Ampol climbed 5.41 per cent after raising first-quarter pre-tax earnings to $150 million from $122 million the previous quarter. Increased margins helped offset lower volumes. Woodside tacked on 0.79 per cent, Santos 2.28 per cent and Beach Energy 2.99 per cent.
Jeweller Michael Hill climbed 5.73 per cent to a two-and-a-half year high after increasing sales by 16.4 per cent last quarter.
A strong week for new listings continued with uranium explorer 92 Energy rallying 42.5 per cent on its first day on the boards. The Perth-based company has projects in Canada.
Doghouse
Gold miners sold off as rising bond yields dulled demand for alternative stores of wealth. Newcrest fell 1.25 per cent, Resolute Mining 6.48 per cent and Evolution 5.56 per cent.
Regis Resources slumped to its lowest price since 2016 after issuing shares to fund its purchase of IGO’s Tropicana gold mine. The miner raised $494 million from institutions at $2.70 per new share. The share price traded as low as $2.61 before trimming its loss to 11.95 per cent at $2.69.
Companies with significant US earnings faced down-pressure from a drop in the greenback. Transurban eased 0.18 per cent, ResMed 0.81 per cent and Cochlear 0.1 per cent.
A production downgrade sent coal miner Whitehaven down 15.45 per cent. Geological challenges at the Narrabri underground mine prompted the firm to cut its coal sales projection to 17.8-18.3 million tonnes from previous guidance of 18.5-19 million. Unit costs also increased.
Bank of Queensland dropped 0.79 per cent despite reporting a 66 per cent first-half profit rebound to $154 million. CEO and Managing Director Georg Frazis said the bank’s retail business had “delivered a strong turnaround”. The bank raised its interim dividend to 17 cents per share from 11 cents in 1H20.
Qantas faded 0.19 per cent despite an upbeat trading update. The airline said all domestic crew had returned to work, and strong leisure demand meant the airline was operating at 90 per cent of pre-Covid levels. Despite recent vaccine setbacks, the company said it continued to prepared for the resumption of international travel in late October.
Other markets
Gold rallied $6.30 or 0.37 per cent to US$1,742.70 an ounce.
Brent crude inched up four cents or 0.06 per cent to US$66.62 a barrel.
The dollar eased 0.06 per cent to 77.2 US cents.
