ASX Close: One-week high as miners rebound

The share market rose for a third day as a sharp rebound in iron ore lifted the miners and strong earnings from WiseTech boosted the tech sector.  

The S&P/ASX 200 climbed 29 points or 0.39 per cent to its highest close in more than a week.  

A 9 per cent rebound in ore prices lifted Rio Tinto, BHP and Fortescue off multi-month lows. Tech heavyweight WiseTech temporarily surged almost 60 per cent after beating earnings expectations.

The rally briefly stuttered as weak construction data increased the odds on a second recession in two years. The big four banks receded with lending rates before reasserting themselves late in the session.

What moved the market

A 9 per cent rebound in iron ore and a six-month high in tech stocks got the session off to a bright start. The spot price for ore landed in China bounced US$12.10 to US$148.60 a tonne.

Fortescue Metals climbed 2.63 per cent further from Monday’s five-month low. Rio Tinto added 2.6 per cent and BHP 1.25 per cent.

WiseTech lit up the tech sector by flying up 59 per cent in morning action. A ‘Please Explain’ from the ASX and a trading halt took some of the wind out of the rally. The logistics software specialist cut its advance to 28.45 per cent by the close (more below).

Market jitters over next week’s second-quarter GDP reading increased after construction data came in well short of expectations. Total construction increased a seasonally-adjusted 0.8 per cent last quarter, versus expected growth of 2.8 per cent.

AMP Capital’s Chief Economist Shane Oliver said the soft result sharpened the risk of a technical recession, defined as consecutive quarters of negative growth. The Australian Bureau of Statistics is scheduled to report gross domestic product next week.

“The weak outcome with likely -ve net exports adds to the risk of a fall in June qtr GDP & hence a ‘recession’ as Sept qtr will be -ve,” he tweeted.

Alex Joiner, the chief economist of IFM Investors, concurred. “Supports the narrative that Q2 real GDP will be soft and indeed risks being negative,” he tweeted.

The day’s Covid news was mixed. New South Wales reported a record 919 new local cases. China announced the Meishan terminal at the world’s third busiest port had reopened following a two-week closure due to Covid.

US futures marked time as Asian markets traded mixed but little changed ahead of the Jackson Hole economic symposium. S&P 500 futures dipped a point or 0.02 per cent.

The Asia Dow inched up 0.12 per cent. Japan’s Nikkei rose 0.02 per cent. China’s Shanghai Composite was the only significant mover, rising 0.47 per cent. Hong Kong’s Hang Seng shed 0.12 per cent.

“Investors’ focus seems to have shifted to the Federal Reserve’s Jackson Hole conference, where Chair Jerome Powell is scheduled to virtually speak on Friday,” Kalkine Group CEO Kunal Sawhney said. “Investors are expected to look for clues to the contours of the central bank’s plans for tapering monetary stimulus from Powell’s speech at Jackson Hole. 

“Speculations are rife that the Fed Chair will reiterate the message from the July meeting of quantitative easing tapering by the end of 2021 if the labour market continues to strengthen. Any further clues on the shape and timing of tapering will be closely watched in the conference statement due later this week.” 

Winners’ circle

Travel and tourism stocks outperformed for a second day. Webjet rallied 6.46 per cent, Flight Centre 7.42 per cent, Qantas 5.41 per cent and Corporate Travel Management 4.57 per cent.

WiseTech closed at an all-time high after smashing earnings expectations. The logistics software specialist reported full-year revenue of $507.5 million as its CargoWise product gained traction. Underlying net profit doubled to $105.8 million.

SkyCity rallied 5.35 per cent as investors bet on a rebound in earnings when its casino in Auckland emerges from lockdown. Full-year net profit shrank 33.7 per cent to NZ$156.1 million. Revenues declined 15.4 per cent to NZ$951.9 million.

A busy session for earnings also included well-received updates from Lovisa +17.61 per cent, Ridley +8.77 per cent, Orocobre +3.7 per cent, IDP Education +1.72 per cent, Mount Gibson Iron +1.46 per cent, Pexa +0.18 per cent and Medibank Private +0.57 per cent.

Bravura Solutions dived 15.96 per cent, Worley 2.56 per cent, Iluka 1.66 per cent, Northern Star 0.41 per cent and Mydeal.com.au 11.9 per cent.

Doghouse

Takeover target Afterpay eased 1.18 per cent as revenue growth fell short of expectations. While full-year underlying sales jumped 90 per cent, revenue of $924.7 million missed the analysts’ consensus by around $16 million. The buy now pay later leader declared a statutory loss of $159.4 million.

Rival Buy now pay later player Z1p Co faded 2.6 per cent after reporting a full-year loss of $653 million. Revenue increased 150 per cent to $403 million.

Nine Entertainment slipped 9.73 per cent after warning of increased costs in the year ahead. The media group swung to a full-year net profit of $184 million on revenues of $2.3 billion.   

An announcement Kerry Stokes will stand down as chair of Seven Group took some of the shine off a 440 per cent surge in full-year net profit. Terry Davis will replace Stokes at the conclusion of the November AGM. Seven’s statutory net profit rose to $634.6 million from $117.5 million in FY20 amid a revival of mining and infrastructure activity. Shares in the firm eased 7.56 per cent.   

A profit hit from impairment charges and finance costs helped pull APA Group down 3.01 per cent. The gas infrastructure firm’s reported full-year profit shrank to $3.7 million from $311 million in FY20 as it wrote down a Victorian gas plant. Revenue increased 0.7 per cent to $2.144 billion.

An increase in costs and doubts over second-half earnings overshadowed a 94.5 per cent improvement in first-half net profit at cement manufacturer Adbri. The company will spend around $200 million on its Kwinana and Accolade projects. The traditional seasonal bump in second-half earnings will be impacted by reduced lime volumes to Alcoa, the launch of a rival cement import terminal and the effects of Covid-19. The share price dipped 5.21 per cent.

Companies going ex-dividend included AGL -3.48 per cent, Telstra -2.54 per cent and Tabcorp -1.62 per cent. Downer EDI improved 0.3 per cent.  

Other markets

A two-session rebound in oil faltered. Brent crude fell 16 US cents or 0.23 per cent to US$70.89 a barrel.

Gold declined US$11.30 or 0.62 per cent to US$1,797.20 an ounce as the US dollar rallied.

The dollar eased 0.1 per cent to 72.42 US cents.