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A third day of gains boosted the ASX to within a few points of its pandemic-era high following back-to-back record closes in the US over the Easter break.
The S&P/ASX 200 got within two points of this year’s closing peak of 6917 before trimming its advance. The index finished 57 points or 0.84 per cent ahead at 6886 as US futures faded with Asian markets
The market retained its gains after the Reserve Bank left the cash rate at 0.1 per cent and reiterated it does not expect to lift it until 2024 at the earliest.
What moved the market
The tech sector surged 5.1 per cent as local companies narrowed the performance gap with the Nasdaq. The US benchmark put on around 3.5 per cent in two sessions either side of the Easter break.
The Australian tech index hit its highest level in more than a month as worries about rising borrowing costs continued to abate. The yield on ten-year Australian bonds retreated six basis points today. Afterpay surged 10 per cent, Nuix 6 per cent, WiseTech 5.2 per cent and Nearmap 4.3 per cent.
Travel stocks were boosted by the creation of a New Zealand-Australia travel bubble. Kiwi Prime Minister Jacinda Ardern announced Australians could travel to NZ from April 18 without quarantining. Air New Zealand jumped 8.2 per cent, Sydney Airport 2.8 per cent, Qantas 3.1 per cent and Auckland International Airport 1.1 per cent. Travel agents Webjet and Flight Centre gained 4.7 and 4.4 per cent, respectively.
This afternoon’s RBA Rate Statement contained no surprises. The bank acknowledged progress towards meeting its policy goals, but said wage and price pressures were subdued and unemployment still too high.
“The Board will not increase the cash rate until actual inflation is sustainably within the 2- to 3- per cent target range,” the Board said. “The Board does not expect these conditions to be met until 2024 at the earliest,” the statement added.
The market gave up its session highs as Asian markets steered US futures lower. The Asia Dow dropped 0.5 per cent. China’s Shanghai Composite shed 0.2 per cent and Japan’s Nikkei 1.33 per cent. S&P 500 futures faded more than six points or almost 0.2 per cent. Dow futures fell 64 points or 0.2 per cent.
The S&P 500 and Dow hit record highs overnight as strong economic data reinforced optimism about the strength of the recovery. The S&P 500 gained 1.44 per cent and the Dow 1.13 per cent.
“Vaccinations are rolling out at a record clip, and historic stimulus efforts from Congress have all paved the way for continued positive market momentum,” Chris Larkin, managing director of trading and investing product at E-Trade Financial, told CNBC.
Winners’ circle
Sixteen of the twenty market heavyweights of the ASX 20 advanced. Gains ranged from less than 0.1 per cent for Macquarie Group to Afterpay’s 10 per cent. Coles and Telstra closed flat. On the wider ASX 200, roughly three-quarters of companies rose.
An upgraded iron ore forecast from ratings agency S&P Global helped lift the big three domestic producers. S&P raised its ore price assumption for the year from US$100 a tonne to US$130, citing a global supply deficit. The agency also hiked its price outlook for next year.
“In our view, global demand will continue to outstrip supply over the next one to two years,” S&P analyst Donald Marleau wrote.
BHP climbed 0.4 per cent, Fortescue Metals 1.4 per cent and Rio Tinto 0.1 per cent. Champion Iron gained 5.5 per cent. Gold miner Newcrest added 2.1 per cent.
Cleanaway soared 15.9 per cent after striking a deal to buy French waste manager Suez Groupe’s Australian operations for $2.52 billion. Suez employs more than 2,000 people in Australia and operates six landfills and 59 collection and depot facilities. Cleanaway will fund the deal by raising capital and adding debt.
The best of the behemoths outside the tech and materials space were Transurban +2.9 per cent, Aristocrat Leisure +1.4 per cent and Goodman Group +0.9 per cent. Westpac gained 0.7 per cent, ANZ 0.4 per cent and NAB 0.5 per cent. CBA retreated 0.2 per cent.
Doghouse
A delay in restarting operations at Incitec Pivot‘s US ammonia plant sent the chemicals manufacturer’s shares down 8.2 per cent. Production will be postponed by at least a month following a seal failure and excessive vibrations in a fan turbine at the Waggaman plant. The turnaround cost was expected to be $80 million.
Real estate group Dexus sank 0.9 per cent after announcing the sale of 34-storey office asset 10 Eagle Street, Brisbane, for $285 million.
AMP unwound Thursday’s gains, which followed the departure of CEO Francesco De Ferrari. The share price retreated 4.9 per cent.
Oil companies traded mixed following a 4.2 per cent dive in Brent crude overnight. Woodside edged up 0.5 per cent. Oil Search slid 1.2 per cent and Santos 1.7 per cent.
Other markets
Oil rebounded from last night’s slump. Brent crude bounced 58 cents or 0.9 per cent to US$62.73 a barrel.
Gold rose $9.40 or 0.5 per cent at US$1,738.10 an ounce.
The dollar eased 0.12 per cent to 76.47 US cents.
