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A smooth week for investors ended with a fourth straight rise and a six-month high as a US holiday helped reduce market volatility.
The S&P/ASX 200 cruised to a gain of 18 points or 0.24 per cent for the session, and 108 points and 1.5 per cent for the week.
The market has risen for four of the last five weeks and gained more than 13 per cent since the lows of early October.
Retailers rallied today on optimism over a Black Friday sales splurge. Banks and defensive sectors also advanced. Resource stocks dragged after Chinese Covid numbers hit record levels.
What moved the market
Thanksgiving week lived up to its reputation as a favourable time for investing. Wall Street has risen during 49 of the last 72 Thanksgiving weeks. The thinly-traded Wednesday-Friday period is even more reliable: the S&P 500 has advanced on 60 of 72 occasions.
Australian stocks ground higher this session after overnight European action maintained the constructive mood while Wall Street closed for the US holiday. The pan-European Stoxx 600 index climbed 0.46 per cent to its strongest finish in four months.
Volatility has died down dramatically since early October after the Reserve Bank surprised the market with smaller interest rate hike. Other central banks have either followed suit or flagged their intention to slow the pace of rate increases.
The Australian volatility index fell to a three-month low this session, mirroring a similar move in the American VIX on the eve of Thanksgiving.
“Things have been fine for equities over the past few weeks, and the biggest driver is the expectation that central banks are about to soften their stance in future monetary policy meetings,” Kunal Sawhney, chief executive of Kalkine Group, said.
The big question for investors is whether this year’s market correction is over. Sawhney said China remained a concern as the government doggedly pursued a zero-Covid policy long since abandoned by western nations.
“It is difficult to foretell at the moment whether the market correction is now a thing of the past,” he said. “There are some good signs, especially because the biggest fear of regular and sharp rate hikes has somewhat waned, but concerns like rising Covid cases in China and an expected hard blow to global economic growth in 2023 cannot be ignored.
“There are worries that the Chinese economy could post lower-than-expected GDP growth this year because of Covid-related lockdowns. No matter what China says about cutting the reserve requirement ratio to lift its economy, industrial activity continues to be disturbed, which can impact the Aussie market over the coming weeks.”
US futures remained positive when trade resumed today in the lead-up to tonight’s session. The New York Stock Exchange will reopen for a truncated session, ending at 1 pm.
S&P 500 futures firmed 10.5 points or 0.26 per cent. Nasdaq futures gained 52 points or 0.44 per cent.
Winners’ circle
Retail stocks rallied in anticipation of a Black Friday sales boost. Harvey Norman climbed 3.12 per cent. Super Retail Group firmed 2.06 per cent. JB Hi Fi added 1.93 per cent, Wesfarmers 0.63 per cent and Premier Investments 1.26 per cent.
Tech stocks rose for a second session since the US Federal Reserve flagged a possible slowdown in rate hikes, driving the cost of long-term borrowing lower. Megaport gained 4.4 per cent, Technology One 3.21 per cent and NextDC 2.31 per cent.
Payments platform EML surged 22.64 per cent as the prospect of a strategic pivot overshadowed news of a 5 per cent decline in revenue last quarter compared to the prior corresponding period. CEO and Managing Director Emma Shand told today’s AGM the firm was embarked on a three-to-five year transformation plan to capitalise on a global shift to open banking.
Nanosonics continued to recover from last week’s AGM meltdown, rising 11.06 per cent. Virgin Money UK climbed 6.12 per cent to a seven-month high.
Construction contractor Maas Group (MGH) gained 7.6 per cent after announcing its entry into the Victorian construction materials market. The firm will acquire Dandy Premix, a construction materials business based in Melbourne, for $85 million in cash and shares.
“This acquisition represents a significant step in the expansion of our construction materials business, establishing a new hub for MGH in Victoria,” Managing Director and CEO Wes Maas said.
At the pointy end of the market, Goodman Group gained 1.13 per cent, Telstra 1.52 per cent and Newcrest 0.81 per cent. The big four banks put on between 0.5 and 1.1 per cent.
Doghouse
BHP dropped 0.79 per cent after Reuters reported workers at the Escondida copper mine in Chile rejected the miner’s latest offer. Miners may strike as soon as Monday after the union deemed revised security measures proposed by BHP “insufficient”.
Rio Tinto shed 0.77 per cent. Fortescue Metals lost 1.2 per cent.
Energy stocks were mixed as oil bounced off eight-week lows. Woodside Energy gave up 0.68 per cent. Santos gained 0.68 per cent.
Battery metal companies were among the session’s worst performers despite a 0.45 per cent bounce in a UK-listed lithium and battery tech ETF overnight. On Wednesday, the UK version of the Global X fund fell to its lowest level since May.
Allkem lost 8.61 per cent. Pilbara Minerals dropped 6.69 per cent. Lake Resources shed 5.74 per cent, Core Lithium 5.65 per cent and Mineral Resources 4.31 per cent.
Plus-size clothing retailer City Chic Collective plunged 28.42 per cent when today’s AGM heard global revenues were down two per cent year to date. The firm’s US trade fell 12 per cent year on year. Gross margins contracted 4 per cent, primarily due to soft demand in the northern hemisphere.
Natural health supplements firm Blackmores eased 0.38 per cent. Chair Anne Templeman-Jones announced she will stand down after steering the company through the pandemic and associated supply-chain disruptions. Independent director Wendy Stops will move into the chair.
Other markets
A mixed session on Asian markets saw the Asia Dow slip 0.36 per cent, Hong Kong’s Hang Seng drop 0.86 per cent and Japan’s Nikkei shed 0.35 per cent. China’s Shanghai Composite gained 0.39 per cent.
Brent crude bounced 42 US cents or 0.5 per cent to US$85.66 a barrel.
Gold rallied US$13.40 or almost 0.8 per cent to US$1,759 an ounce.
The dollar climbed 0.1 per cent to 67.73 US cents.
