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The share market hit an all-time high before trimming an eighth month of gains as the big banks retreated.
The S&P/ASX 200 passed 7200 for the first time, then faded to a loss of 18 points or 0.25 per cent. The index rose as high as 7203.3, surpassing its February 2020 pre-pandemic peak by six points before the rot set in.
Ultimately, gains in Fortescue Metals, Telstra, CSL and Rio Tinto were outweighed by declines in oil and tech companies, industrials and the heavily-weighted high-street banks.
What moved the market
The domestic market’s remarkable recovery from last year’s Covid-fuelled collapse took 14 months and offered shrewd investors a chance to participate in a rally of 63 per cent off the lows. Growth stocks led the initial recovery last year before a rotation this year into cyclical stocks with better exposure to the improving global economy.
Boosted by record-low interest rates, government spending and an unexpectedly strong rebound in corporate earnings, the ASX 200 has risen for 13 of the past 14 months. Despite today’s setback, the index recorded a gain of 136 points or 1.9 per cent for May. End-of-month buying ensured volumes remained healthy despite market holidays in the US and UK tonight.
The market hit its session peak in the first hour, then faded as the prospects for a quick rebound out of lockdown in Victoria dimmed. State health authorities reported another six local Covid-19 cases late this morning, in addition to five reported earlier in the day. Three of the cases were linked to residential aged care facilities.
“The challenge ahead of us is a very significant one,” Acting Premier James Merlino said. “In the past 24 hours we’ve identified many more points of concern.
“I want to be really clear with everyone that this outbreak may well get worse before it gets better,” he added.
Chief Health Officer Brett Sutton said, “We’re neck and neck with this virus and it’s, it’s an absolute beast.”
US stocks wrapped up a stop-start month with slender gains on Friday. The S&P 500 inched up 0.08 per cent ahead of the Memorial Day long weekend. The US benchmark gained 1.2 per cent for the week and 0.6 per cent during a month dominated by fears about inflation and volatility in cryptocurrencies.
The morning’s economic data showed the pace of Chinese manufacturing cooled a fraction this month. The China Federation of Logistics and Purchasing PMI dipped to 51 from 51.1 last month. A measure of services activity increased to 55.2 from 54.9. Readings above 50 indicate expanding activity.
Winners’ circle
A patternless session for the heavyweight miners saw some rise, some fall. Fortescue Metals put on 1.4 per cent, Newcrest 0.71 per cent and Rio Tinto 0.58 per cent. BHP eased 0.64 per cent. South32 shed 0.67 per cent.
The day’s prime movers beyond the mining space were Telstra +0.86 per cent, Goodman +0.52 per cent and CSL +0.38 per cent.
Property giant Dexus edged up 0.48 per cent after announcing it expects to distribute 3 per cent more per security for the full year than previously indicated.
“Today’s upgrade is a result of better-than-expected outcomes across the underlying property portfolio, as well as delayed settlements for asset sales and other initiatives across the business,” CEO Darren Steinberg said.
Gold miners Resolute and Perseus were the index’s best performers, rising 4.27 and 3.57 per cent, respectively.
Doghouse
Woodside fell 1.36 per cent as oil producers retreated ahead of tomorrow night’s OPEC+ oil cartel meeting. Santos declined 1.6 per cent, Oil Search 2.15 per cent and Beach Energy 0.39 per cent.
The big four banks led the mid-morning reversal. CBA faded 0.84 per cent, NAB 0.52 per cent, ANZ 0.52 per cent and Westpac 0.15 per cent. Pokie-maker Aristocrat Leisure dropped 2.05 per cent from Friday’s record close.
A downgraded forecast drove Nuix to fresh lows. Shares in the data analytics firm sank 17.8 per cent after the company warned it expected to miss full-year revenue and annualised contract value forecasts issued as recently as last month. Today’s news was the latest in a series of setbacks since the company listed in December.
“There’s a near-term level of uncertainty regarding the precise timing, shape and scope of some large and anticipated customer contracts coming to fruition in the next few weeks,” CEO Rod Vawdrey said. “We expect to capture most of the revenue which remains under current negotiation with these customers either by financial year-end or early in our new financial year. We remain confident in the long-term outlook for the company.”
BetMakers fell heavily for a second session since announcing a bid for Tabcorp’s media and wagering business. Shares in the company dropped 13.06 per cent to a six-week low.
Link Administration Holdings declined 6.79 per cent on news the firm and other stakeholders will float the PEXA real estate settlements platform, rather than pursue a sale. Link said its board concluded it was in shareholders’ best interests to retain an interest in PEXA. Link has a 44 per cent stake in the platform.
Beleaguered infant formula firm A2 Milk dropped 0.36 per cent following media reports of a possible class action. The company said it was “not aware of any legal proceeding having been filed at this time”. Managing Director David Bortolussi said the company had complied with its disclosure obligations. The share price hit a three-and-a-half-year low earlier this month.
Property ad business REA Group faded 0.5 per cent back on news it will merge its Malaysia and Thailand businesses into PropertyGuru in exchange for an 18 per cent stake in the Asian marketplace and a seat on the board.
REA Group CEO Owen Wilson said, “This transaction presents a unique opportunity to create the most compelling digital property classifieds company in Southeast Asia.”
Other markets
A soft session on Asian markets saw the Asia Dow decline 0.32 per cent, Hong Kong’s Hang Seng 0.67 per cent and Japan’s Nikkei 0.94 per cent. China’s Shanghai Composite inched up 0.04 per cent.
S&P 500 futures rallied almost three points or 0.06 per cent over the Memorial Day long weekend.
Oil reversed most of Friday’s 48-cent loss. Brent crude bounced 38 cents or 0.55 per cent to US$69.10 a barrel.
Gold added to Friday’s gains, rising $2.60 or 0.14 per cent to US$1,907.90 an ounce.
The dollar improved 0.21 per cent to 77.23 US cents.
