The share market overcame a mid-session wobble to edge to a fourth-straight gain and a fresh nine-month high.
The S&P/ASX 200 finished five points or 0.07 per cent ahead at 7457.3 after briefly falling around 18 points.
Gains in tech stocks, energy producers and lithium miners outweighed declines in iron ore producers, Wesfarmers and Telstra.
What moved the market
The market edged to within 2.3 per cent of an all-time high ahead of inflation data and a public holiday later this week. Wall Street’s best session in a fortnight helped keep the local market on the upswing following three weeks of gains.
“With a week left, the ASX is up 5.87% for January, reclaiming all of December’s losses and more to be just 2.3% below its all-time highs,” Tony Sycamore, market analyst at IG, said.
“At a sector level, the influential Financial Sector kicked into gear over the past fortnight to be +4.68% for the month and the year… Elsewhere, the Materials Sector, which now accounts for 32% of the index, captured headlines after a mammoth 9.68% rally in January,” he added.
The S&P 500 jumped 1.89 per cent on Friday, its first rise in four sessions. The Nasdaq Composite rallied 2.66 per cent, outpacing a 1 per cent rise in the blue chips of the Dow.
Trading activity this week will be dulled by public holidays in China and Australia. Trade in Shanghai is suspended all week for Lunar New Year. Hong Kong is closed until Thursday. The ASX shuts on the 26th for Australia Day.
The local market also faces a potential hurdle in Wednesday’s quarterly inflation report. Much of this year’s rally has been built on the conviction inflationary pressures are set to abate, relieving pressure on the Reserve Bank to keep hiking official rates.
“Australian headline and Trimmed Mean measures are both seen up 1.6% on the quarter (NAB and consensus) for 7.5% and 6.5% (NAB 6.6%) yr/yr up from 7.3% and 6.1% in Q3,” Ray Attrill, head of FX strategy at NAB, wrote.
Gas producer Karoon Energy popped 7.41 per cent after upgrading reserves at its Santos Basin concession in Brazil by 23 per cent. Recent production data indicated producing wells were performing better than expected.
Tech and battery metal miners filled most of the other slots at the top of the index. Last week’s best performer, lithium miner Pilbara Minerals, rallied 6.15 per cent. Afterpay’s parent company, Block, surfed positive Nasdaq sentiment to a gain of 6.07 per cent.
Liontown Resources advanced 7.41 per cent, Novonix 6.02 per cent and Core Lithium 5.69 per cent.
South32 rallied 1.31 per cent following a 12 per cent increase in first-half copper production as costs remained in line with or below full-year guidance. Aluminium production increased 15 per cent. A record half for Australian manganese generated an increase of 7 per cent in total manganese production.
A second straight month of profitability lifted BNPL player Sezzle 37.61 per cent to a five-month high. Net income of US$1.8 million last month helped the firm swing from a net loss of US$25.9 million in Q421 to net income of US$0.5 million last quarter.
“In 2022, we set out on a mission to become profitable by year end,” Charlie Youakim, Sezzle’s Chairman and CEO, said. “We are excited, as we have shown investors that we are clearly on the path to profitability with a well-capitalized balance sheet that does not require additional capital,” he added.
Mining tech provider Imdex rose 6.11 per cent to $2.58 after raising $185 million from institutional investors at $2.20. Funds raised will be used to acquire Norway’s Devico AS, a specialist in directional drilling tech and advanced sensors.
The mining majors fell ahead of an anticipated slowdown in demand as China closes for a week-long holiday. BHP shed 1.1 per cent, Rio Tinto 0.64 per cent and Fortescue Metals 0.97 per cent.
The major banks turned mixed after Macquarie downgraded the sector to “Underweight”. Macquarie analysts said they saw “downside risk to earnings” as inflation and higher rates undermine asset values and increase impairments.
Westpac eased 0.46 per cent, NAB 0.28 per cent and CBA 0.05 per cent. ANZ firmed 0.69 per cent. Other heavyweight drags included Wesfarmers -0.75 per cent, Telstra -0.73 per cent and Transurban -0.36 per cent.
Ramelius Resources dropped 0.92 per cent after a blowout in costs forced the gold miner to defer plans to extend open pit mining at its Edna May operation. The deferment will not affect the firm’s production outlook.
“Well publicised cost increases across the WA mining sector have eroded the returns on the Stage 3 Open Pit project to the point where they simply do not meet our internal hurdles,” Managing Director Mark Zeptner said.
Coal miner Stanmore Resources hit a record before fading after meeting second-half production guidance. The result was boosted by record run of mine production at the Isaac Plains Complex through October and November. The share price hit an all-time high at $3.755 before easing 6.56 per cent to $3.42.
Financial services provider Sequoia slumped 9.84 per cent after warning first-half earnings would fall 40 per cent short of budget. The group attributed the miss to “a number of one-off issues” and said it expected to make up “a significant amount” of the profit shortfall this half.
BNPL junior Laybuy entered a trading halt pending an announcement regarding plans to delist. The firm’s disastrous run on the boards looked set to end after shares that listed at $1.41 in 2020 traded recently at six cents, a loss for initial investors of more than 95 per cent. The dramatic decline came as a bubble in buy now, pay later stocks deflated.
With many Asian markets closed for Lunar New Year holidays, the Asia Dow gained 0.71 per cent and Japan’s Nikkei put on 1.31 per cent.
S&P 500 futures retreated four points or 0.1 per cent.
Oil trimmed last week’s 2.8 per cent advance. Brent crude reversed 24 US cents or 0.27 per cent to US$87.39 a barrel.
Gold climbed US$2.50 or 0.13 per cent to US$1,930.70 an ounce.
The dollar gave up modest early gains to trade flat at 69.83 US cents.