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The share market recorded its highest ever close as renewed optimism in the global economic outlook lifted cyclical stocks.  

The S&P/ASX 200 set a pandemic high of 7186.8 before trimming its advance to 85 points or 1.19 per cent at 7179.5.

While today’s close was the highest on record, the index fell 11 points short of last February’s all-time intraday high. For the week, the index gained 149 points or 2.1 per cent, its best performance in seven weeks.

What moved the market

Confidence returned to global markets this week as volatility in cryptocurrencies died down, borrowing costs retreated and economic indicators pointed to an accelerating US economy. Central bank officials continued to talk down the threat of inflation, soothing concerns stimulus flows will cease sooner than expected and rates will rise.

Cyclical stocks most closely tied to economic growth led today’s advance. The materials sector climbed 1.88 per cent to its highest in more than a week after strong US economic data bolstered optimism about the outlook for raw materials. The energy sector rose 1.66 per cent after US crude rallied to its highest since October 2018. The industrial sector gained 1.63 per cent.

Overnight, the S&P 500 gained 0.12 per cent following strong GDP and labour market data. The Dow put on 0.41 per cent.

“The US economy seems to be regaining consciousness from the last year’s deep recession when rising coronavirus cases and virus-driven lockdowns brought economic and social life to a near-standstill,” Kalkine Group CEO Kunal Sawhney said.

“At the same time, the accelerated pace of COVID-19 vaccination and massive government assistance appear to be strengthening investors’ confidence, which has been wobbling for long amid rising inflation fears. Some part of credit also goes to the US Fed officials who recently soothed inflation worries, reiterating that the central bank will retain its current dovish monetary policy stance.”  

US futures strengthened ahead of the last session before the Memorial Day long weekend. S&P 500 futures rallied 10 points or 0.25 per cent.

Helping sentiment here was news Victoria recorded just four new local Covid-19 cases in the last 24 hours as the state returned to lockdown. The drop in cases from 11 the previous day raised hopes the current breakout can be contained.

“The local share market appears to be demonstrating considerable resilience, weathering reports of fresh lockdown introduced in Victoria as authorities struggle to control a highly infectious outbreak. It seems that investors have gradually learned to live with breakouts, considering the recent surge in cases as a temporary or transitory phase,” Kalkine’s Mr Sawhney said.  

Buying interest was also sharpened by the looming end of the month. Institutional traders whose performance is measured by monthly returns have an interest in pushing their portfolios as high as they can by Monday’s close.

Winners’ circle

Miners rebounded after backing off record levels earlier this month as China intensified its war on surging commodity prices. BHP bounced 2.91 per cent. Rio Tinto rose 2.63 per cent, Oz Minerals 4.74 per cent and South32 5.63 per cent. Nickel miner IGO gained 4.25 per cent, Whitehaven Coal 4.23 per cent and Mineral Resources 4.32 per cent. Fortescue Metals faded to a loss of 0.67 per cent.

Woodside Petroleum advanced 1.89 per cent as the energy sector pushed further off six-month lows. Oil Search put on 2.2 per cent, Santos 2.23 per cent and Beach Energy 1.59 per cent.

Industrial giants Transurban and Brambles helped lift the sector to its highest in more than two weeks amid optimism about the improving outlook for the global economy. Toll road operator Transurban climbed 1.76 per cent. Supply-chain logistics specialist Brambles gained 1.31 per cent.

The big four banks put on between 1.12 and 1.61 per cent.

A profit upgrade propelled poultry king Ingham’s 8.6 per cent to the top of the index. The company said full-year earnings “may exceed” and statutory profit “may materially exceed” the market consensus.  

Real estate listings firm Domain Holdings rose 3.06 per cent after confirming it was part of a consortium exploring acquiring an interest in the property settlement platform PEXA. Link Administration, which holds a 44.2 per cent in the target, rose 5.01 per cent.  

Tabcorp jumped 2.17 per cent to a three-year high after BetMakers lobbed a $4 billion bid for the group’s Wagering and Media business. Tabcorp said its board had not yet formed a view on the offer, which consisted of around $1 billion in cash and $3 billion in shares. BetMakers shares dived 16.25 per cent.

Doghouse

A jump in bond yields weighed on growth stocks. The yield on ten-year Australian government bonds bounced more than five basis points to 1.638 per cent following a similar move in the US overnight. WiseTech fell 1.8 per cent, EML Payments 1.16 per cent, Xero 1.14 per cent and Afterpay 1.11 per cent. Nuix slumped 5.07 per cent after announcing it had parted ways with co-founder Tony Castagna.

The utilities sector, which attracts funds when yields weaken, was the morning’s worst performer before closing the session flat. APA Group shed 0.97 per cent. Mercury NZ lost 7.89 per cent.

A slump in global almond prices knocked grower Select Harvests‘ half-year profit down 92.5 per cent to $1.3 million. Earnings tumbled 62.9 per cent despite a 21.5 per cent increase in the size of the company’s crop. The share price slid 1.01 per cent.

“As anticipated, lower global almond prices have negatively impacted earnings, delivering a first half financial result well below recent prior periods,” Paul Thompson, Managing Director, said. “The company remains focused on factors within its control such as almond volume, quality and operational costs.”

CSR dropped 5.27 per cent as it traded without the right to a dividend.

Other markets

The Asia Dow firmed 1.49 per cent. Hong Kong’s Hang Seng advanced 0.31 per cent and Japan’s Nikkei 2.13 per cent. China’s Shanghai Composite fell 0.3 per cent,

Oil developed good momentum overnight and continued higher this afternoon. Brent crude rallied ten cents or 0.14 per cent to US$69.30 a barrel.

Gold dipped $5.20 or 0.27 per cent to US$1,893.30 an ounce.

The dollar retreated 0.2 per cent to 77.27 US cents.

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