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The share market climbed to a two-week high as a rebound in commodity prices helped overcome scepticism about the durability of the current recovery.
The S&P/ASX 200 rallied 58 points or 0.86 per cent to a fourth straight gain. The advance increased the benchmark’s revival since last week’s low to nearly 5.6 per cent.
Energy producers, miners and utilities spearheaded the rise. Consumer and tech stocks retreated.
What moved the market
The market added to its longest winning run since mid-May as the looming end of the financial year distracted from longer-term worries. Stocks rallied amid speculation institutional portfolio managers were likely buyers in the rundown to June 30.
“Month end rebalancing plays to the view that some buying should be seen over coming days given the need for portfolios to increase their equity exposure after the big losses during the quarter (S&P 500 -14% qtd),” NAB currency strategist Rodrigo Catril said.
Today’s buying was more tentative than yesterday following a down-night on Wall Street and doubts about the longevity of the current rebound.
“Market bulls who have had the rug repeatedly pulled out from under them this year may understandably be suspect of the rally, since many of 2022′s upswings have quickly given way to fresh lows and this time may be no different,” Chris Larkin, managing director of trading at E-Trade, told CNBC.
The S&P 500 eased 0.3 per cent overnight as upbeat economic data suggested recent rate hikes have yet to seriously impede growth.
Rebounds in crude oil, iron ore and industrial metals helped the market shrug off Wall Street’s soft lead.
“Base metals lifted the commodity complex, on data showing China’s economy is rebounding. According to early indicator data from Bloomberg, economic activity picked up in June after financial hub Shanghai lifted its lockdown,” Daniel Hynes, senior commodity strategist at ANZ, said.
Data this morning showed consumer sentiment improved last week but remained near two-year lows. The ANZ-Roy Morgan sentiment index climbed 3.7 per cent to 84.7, still a long way below the 100-point ‘neutral’ level.
Winners’ circle
Energy was the pick of the sectors on both sides of the Pacific as crude steadied ahead of this month’s OPEC+ meeting. Brent crude rose US$1.11 or 1 per cent this afternoon towards a third straight gain. Recoveries in iron ore and copper helped miners.
“Bulls are back with a vengeance, and bargain hunters have been able to bag great bargains since the sell-off in oil prices last week,” Naeem Aslam, chief market analyst at AVATrade, said.
“Oil prices are rising once again today, and yesterday, we saw a decent rally for both Brent and Crude oil prices. Today, traders are ready to build on that momentum.”
Woodside Energy climbed 4.34 per cent to a two-week high after solid US data overnight soothed concerns about the global economy and energy demand. Santos firmed 2.71 per cent. Beach Energy added 6.97 per cent.
The resumption of face-to-face teaching in Beijing and a zero-Covid day in Shanghai helped lift iron ore prices 5.3 per cent on the Dalian Commodity Exchange. Fortescue Metals rallied 3.8 per cent, BHP 4.32 per cent and Rio Tinto 3 per cent.
Gold miner Newcrest bounced 2.9 per cent from near a five-month low. Northern Star rose 6.13per cent. Coal miners New Hope and Whitehaven gained 6.61 and 2.72 per cent, respectively.
Utilities was among the standouts as APA Group rallied 2.6 per cent and AGL put on 4.27 per cent. Origin tacked on 3.31 per cent.
A recovery in European trade helped KFC and Taco Bell franchisee Collins Foods increase full-year underlying profit 25 per cent. Revenues improved 11.1 per cent, thanks in large part to the firm’s German and Dutch franchises. Australian business expanded through greater demand for home deliveries. The share price climbed 11.52 per cent.
Salmon farmer Tassal Group soared 16.12 per cent to $4.61 after knocking back an improved takeover offer from Cooke Inc. The company rejected the Canadian seafood business’s “non-binding, indicate, incomplete and condition proposal” to acquire the firm at $4.85 per share. The board said a five-cent improvement on a previous offer still did not reflect the fundamental value of the business and was not in the best interests of shareholders.
Lab services provider HRL Holdings rocketed 64.63 per cent on takeover interest from industry giant ALS. The HRL board has offered its suitor exclusive access to carry out due diligence until July 20. ALS shares eased 2.48 per cent.
Fuel refiner Ampol firmed 2.03 per cent on news the sale of its Gull business in New Zealand to Allegro Funds for NZ$509 million was now unconditional.
Doghouse
Tech and consumer stocks bore the brunt of the selling as borrowing costs crept higher on fixed-income markets. Megaport slid 5.07 per cent, BrainChip 4.86 per cent and Technology One 1.63 per cent.
Travel stocks gave back some of yesterday’s gains. Flight Centre eased 2.28 per cent, Corporate Travel Management 2.98 per cent and Webjet 1.8 per cent.
Imugene, another of yesterday’s winners, reversed 10.42 per cent. Rate-sensitive payments firms were back under the pump. EML dropped 5.46 per cent, Zip Co 7.77 per cent and Block 3.18 per cent.
BWX plunged 40.6 per cent after warning of a sharp contraction in full-year earnings. The beauty and wellness company expects underlying earnings to drop 59 per cent. The firm will bolster its capital by raising up to $23.2 million at 60 cents, barely half the last closing price of $1.17.
Other markets
US futures tracked an afternoon recovery on Asian markets. The Asia Dow swung to a gain of 0.23 per cent. China’s Shanghai Composite firmed 0.19 per cent. Japan’s Nikkei added 0.48 per cent. Hong Kong’s Hang Seng halved its fall to 0.52 per cent.
S&P 500 futures reversed to a gain of two points or 0.05 per cent.
Gold bounced US$1.80 or 0.1 per cent to US$1,826.60 an ounce.
The dollar edged up 0.12 per cent to 69.28 US cents.
