The share market passed another milestone on the long road back to record levels, reclaiming 6800 for the first time since late February.
Strong leads from the US and a round of broadly positive earnings updates propelled the S&P/ASX 200 up 53 points or 0.79 per cent to 6824. The rally lifted the index to within 5 per cent of last year's pre-pandemic peak.
What moved the market
Dire predictions of a Wall Street hissy fit as Joe Biden returned to the White House have proven spectacularly wrong so far. The S&P 500 surged 1.39 per cent to an all-time high overnight as the former Vice President was sworn in as the 46th president of the United States. Pragmatic investors appear to have decided the short-term benefits of stimulus spending and a faster vaccine rollout outweigh the potential for higher business taxes further down the track.
“The market is rallying on hopes for a speedier recovery,” Peter Cardillio, chief market economist at Spartan Capital, told MarketWatch. But he cautioned, “There will come a point in time when the market will reflect on the new administration’s policies.”
The Nasdaq Composite ran even harder than the S&P 500, sprinting 1.97 per cent to its own record following strong earnings from Netflix. That set the scene for tech stocks to take the reins here today. The technology sector jumped 2.8 per cent to a sixth straight gain. Afterpay once again set the pace following a strong update from rival Z1P Co.
Domestic market sentiment was helped by positive news on jobs and Covid-19. The December employment report showed the economy created 50,000 new positions last month, in line with expectations. The employment rate dropped more than expected to 6.6 per cent from 6.8 per cent.
Queensland announced it will relax restrictions in Greater Brisbane after a tenth day without local Covid transmissions. New South Wales and Victoria also recorded zero locally-acquired cases.
The market responded positively to trading updates from Z1p Co, Netwealth, Perseus Mining and Mosaic Brands. Less well received were reports from Woodside Petroleum, South32, Vicinity Centres and Alumina. Cleanaway Waste Management dived after announcing the departure of CEO and Managing Director Vik Bansal (more below).
Afterpay climbed 5.7 per cent to a new peak after Z1p Co reported record quarterly revenues of $102 million. Z1P's quarterly transaction volumes were more than twice the same period last year. Customer numbers increased by 97 per cent. The share price jumped 23.1 per cent. On the wider tech sector, WiseTech climbed 5.2 per cent, Megaport 4.4 per cent and Bravura Solutions 2.9 per cent.
Netwealth was the index's second-best performer after Z1p Co. The fund manager's shares rallied 11.7 per cent on record quarterly growth of $4.8 billion in funds under management last quarter.
Gold miner Perseus climbed 3.2 per cent on news production increased 12 per cent over the six months to the end of December. Graphite miner Syrah Resources rallied 7.9 per cent to a 22-month peak after updating shareholders about progress at its US facility.
Retail group Mosaic Brands soared 31.3 per cent after first-half earnings significantly outstripped analysts' expectations. The operator of the Noni B, Rivers and Katies brands said pre-tax earnings were expected to be $40 - $45 million, up around 22 - 38 per cent on the same period the previous year.
NAB was the best of the banks, rising 1.6 per cent. Westpac, ANZ and CBA all gained 1.1 per cent. Rio Tinto was the pick of the big three iron ore producers, rising 1.7 per cent. BHP added 1.6 per cent. Fortescue Metals inched up 0.2 per cent.
Retail conglomerate Wesfarmers joined Afterpay at an all-time high, rising 1.5 per cent. Other big movers at the top end of the market were Aristocrat Leisure +1.8 per cent, Woolworths +2 per cent and Goodman Group +1.1 per cent.
Alumina dropped 1.9 per cent on news the strengthening dollar took a toll on earnings last quarter. Adjusted pre-tax earnings slipped to $97 million from $119 million the previous quarter. Margins also contracted due to currency movements.
Shopping centre operator Vicinity Centres fell 2.5 per cent after the impact of the pandemic on retail trade forced the company to cut valuations of its 60 retail properties. The company slashed property values by 4 per cent or $570 million.
A warning about increasing cost pressures from a declining US dollar helped drag South32 down 0.4 per cent. The company produced more alumina, silver, lead and zinc last half, but less coal and nickel.
CSL was among the biggest drags at the heavyweight end, falling 0.8 per cent. Brambles dipped 0.3 per cent.
Santos finished flat after reporting an 18 per cent increase in annual production to a record 89 million barrels. Rival Woodside Petroleum sank 1.6 per cent after production dipped 2 per cent last quarter to 24.9 million barrels.
US futures gained steadily as the session wore on. By the Australian close, S&P 500 futures were ahead 13 points or 0.3 per cent.
The mood also improved in Asia. China's Shanghai Composite added 1.3 per cent, Hong Kong's Hang Seng 0.17 per cent and Japan's Nikkei 0.91 per cent.
Oil turned lower after two nights of gains. Brent crude dipped 19 cents or 0.3 per cent to $US55.89 a barrel. Gold edged up $3.90 or 0.2 per cent to $US1,870.40 an ounce.
The dollar rose 0.23 per cent to 77.7 US cents.
Hot today and not today
Hot today: Novonix (ASX:NVX) surged to an all-time high on news its US subsidiary had secured US$5.57 million from the US Department of Energy to develop furnace technology for producing battery materials. The grant is part of the US government's commitment to develop a domestic supply of materials for the next generation of batteries. Novonix said the award demonstrated the "expertise, progress, partners and technology" it had assembled at its US subsidiary, PUREgraphite. The share price jumped 21.6 per cent to $2.53.
Not today: Industrial waste manager Cleanaway (ASX:CWY) tanked 8.7 per cent on news CEO and Managing Director Vik Bansal was standing down. The company's share price quadrupled during Bansal's tenure from around 60 cents in August 2015 to above $2.60 this month. However, the corporate culture under Bansal attracted negative press last year. The share price sagged 8.5 per cent to $2.38.