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Merger action helped the ASX 200 narrow the gap on last year’s all-time high to less than 1.4 per cent before a late retreat to neutral.
The benchmark index finished two points or 0.03 per cent ahead at 7065.6 after rising as high as 7094.8. The index has not traded above 7100 since February 2020 when Covid-19 was still seen as a Chinese domestic issue.
The broader All Ordinaries squeezed out a third straight record close at 7328, also a gain of two points or 0.03 per cent.
What moved the market
Advances in most of the banks and miners outweighed declines in Telstra, Woodside, CSL and Afterpay. Materials and utilities were the pick of the sectors, energy and REITs the worst.
Positive end-of-week leads from Wall Street were mudded by a Sunday-night retreat in risk assets in the US. S&P 500 futures sank 0.3 per cent before cutting their decline to six points or 0.15 per cent as the Australian session ended. Dow futures were still down 97 points or 0.28 per cent ahead of another big week of corporate earnings. Brent crude fell 12 cents or 0.18 per cent to US$66.65 a barrel. The US dollar edged higher.
Risk appetite was dented over the weekend by a plunge in Bitcoin. The cryptocurrency dived 15 per cent yesterday, then mounted a partial rebound. Ethereum and other major digital currencies also fell following a week of strong gains as trading hub Coinbase listed on the Nasdaq.
“Euphoria was in the air. And usually in the crypto world, there’s a price to pay when that happens,” Antoni Trenchev, co-founder of Nexo, told Bloomberg.
Domestic buying interest was sharpened by two mega-mergers. Orocobre and Galaxy Resources announced their intention to form the world’s fifth largest lithium chemicals company. Real estate groups Centuria Capital and Primewest will merge to form a property giant with $15.5 billion in assets under management.
If approved by shareholders, Orocobre will acquire 100 per cent of the shares in Galaxy in a $4 billion “merger of equals”. Under the scheme of arrangement, Galaxy shareholders will receive 0.569 Orocobre shares for each of their shares. The yet-to-be-named merged entity will have its head office in Argentina, a corporate HQ on the Australian east coast and an office in Perth. Orocobre shares climbed 5.65 per cent to a three-year high. Galaxy shares gained 6.09 per cent.
The board of WA-based Primewest unanimously recommended an off-market takeover from NSW-based Centuria Capital. Primewest shares surged 4.78 per cent to an all-time high. Shares in Centuria Capital faded to a loss of 0.72 per cent.
Winners’ circle
A near-decade peak in iron ore lifted most of the major producers. Rio Tinto put on 1.66 per cent. Fortescue Metals added 1.83 per cent. Further down the food chain, Champion Iron climbed 3.82 per cent to a record. BHP eased 0.02 per cent ahead of Wednesday’s operational review. Gold giant Newcrest added 0.9 per cent.
CBA was the best of the banks, rising 0.97 per cent to its strongest level in six weeks. ANZ gained 0.38 per cent and Westpac 0.16 per cent. NAB finished 0.15 per cent lower. Wesfarmers rose 0.34 per cent to its highest point since early February.
Crown Resorts edged up 0.67 per cent after a private equity firm offered to fund a buyout of James Packer’s stake in the casino group. Oaktree Capital Management would provide around $3 billion via a structured instrument so Crown could buy back the 37 per cent stake held by Packer’s Consolidated Press Holdings. Packer agreed last week to play no role in running the group after an inquiry found the casino was unfit to hold a licence.
Metals recycler Sims will refund $7.5 million in JobKeeper payments following rebound in volumes. The company forecast full-year underlying earnings of $260 – $310 million, thanks to higher scrap prices and improved margins. The share price jumped 8.95 per cent to its highest in two and a half years.
Health insurer Medibank Private finished flat after announcing Chief Customer Officer David Koczkar will take over as CEO.
Doghouse
Energy and tech stocks were the biggest drags following soft ends to the week in the US. Woodside Petroleum fell 1.87 per cent as crude started a new week on the back foot. Beach Energy slid 1.94 per cent and Santos 1.26 per cent. In the tech space, Nearmap shed 3.17 per cent and Afterpay 0.93 per cent.
Telstra slid further from last week’s eight-month, falling 1.75 per cent. Brambles declined 1.04 per cent, Aristocrat Leisure 0.57 per cent, CSL 0.29 per cent and Goodman 0.16 per cent.
Shopping centre operator GPT Group eased 3.12 per cent from four-month highs on news it expects funds from operations to grow around 8 per cent this financial year.
Chief Executive Officer, Bob Johnston, said, “The disruption to our operations is abating… The Group’s high quality portfolio has proved resilient throughout the pandemic. Consumer confidence continues to be strong driving foot traffic at our shopping centres, office utilisation is steadily increasing and demand for logistics assets remains strong reflecting the increased economic activity.”
Seven Group entered a trading halt to raise $500 million through a placement. Funds raised will be used to reduce debt and pursue growth opportunities.
Other markets
Asian markets outside China pared early gains. The Asia Dow rolled over to a loss of 0.24 per cent. Hong Kong’s Hang Seng reduced its rise to 0.61 per cent. Japan’s Nikkei was near flat at +0.02 per cent. China’s Shanghai Composite extended its advance to 1.16 per cent.
Gold pulled back following its best week this year. The yellow metal eased $2 or 0.11 per cent to US$1,778.20 an ounce, trimming last week’s 2 per cent advance.
“With China permitting domestic and international banks to import large amounts of gold into the country, five sources familiar with the matter said, it potentially helps to support gold prices after a months-long decline, according to media reports. After all, China is the world’s biggest gold consumer,” Axi Chief Global Market Strategist Stephen Innes said.
The dollar rose 0.32 per cent to 77.37 US cents as the greenback came off its highs.
