The share market made a fresh high before tempering gains ahead of two nights of potentially market-moving US data.
The S&P/ASX 200 touched an all-time high at 7281.8, then pared its advance to 42 points or 0.59 per cent at 7260.
Oil companies roared higher as crude extended its two-year peak. Growth stocks caught a lift from a decline in bond yields. Retail conglomerate Wesfarmers fell after warning last year’s Covid sales boost was waning.
What moved the market
This week’s run of extraordinarily strong economic data continued with news of record hiring in the services sector. The IHS Market Services Business Activity Index eased to 58 from 58.8, still elevated by historic standards. Firms increased their workforces at a record pace. Input prices and output charges “saw steep increases”.
“The improvement in economic conditions can be seen providing firms with better confidence to continue hiring at a record pace,” IHS Markt Economics Associate Director Jingyi Pan said.
Other reports showed manufacturing output operating near record levels, retail sales expanding 1.1 per cent and the trade surplus growing to $8.03 billion. Today’s upbeat releases followed news yesterday that economic output expanded a faster-than-expected 1.8 per cent over the first three months of the year.
“The GDP figures yesterday were remarkably strong… with the level of GDP now 0.8% above pre-pandemic levels,” NAB Senior Economist and Director David de Garis said. “The data adds to the evidence of a strong rebound in the economy and should prompt questions around the appropriateness of current unconventional policy settings.”
Health officials in Victoria applauded news the state recorded just three new locally-acquired Covid-19 cases yesterday despite increased testing.
“The trend is good,” Victoria’s Chief Health Officer Brett Sutton said. “The last 48 hours have seen more people who are not infectious in the community. That’s a really good sign.”
The market saw a mild bout of profit-taking from mid-day ahead of a slew of US data over the next 36 hours. Tonight brings monthly private-sector jobs data, weekly unemployment benefits claims and a services industry survey. Highlights tomorrow night include the closely-watched government jobs report and average hourly earnings – a leading indicator for consumer inflation.
Overnight, US stocks inched higher in subdued trade. The S&P 500 and Nasdaq both gained 0.14 per cent. The Dow rose 25 points or 0.07 per cent.
The energy sector surged almost 3.3 per cent to a seven-week high as crude probed fresh two-year highs. Santos climbed 3.8 per cent, Woodside 3.11 per cent and Oil Search 4.13 per cent. Beach Energy rallied 5.79 per cent.
Growth stocks and bond proxies advanced as the yield on ten-year Australian government bonds dropped three basis points. Goodman Group rose 0.81 per cent to a post-GFC high. Supermarkets Woolworths and Coles put on 1.47 and 0.96 per cent, respectively. AGL Energy climbed 3.71 per cent. Origin gained 6.16 per cent.
The big four banks shrugged off the decline in lending rates and a tepid night for US financials. CBA rose 0.88 per cent to a new record. ANZ advanced 1.48 per cent, NAB 0.89 per cent and Westpac 1.07 per cent.
Bega Cheese inched up 0.86 per cent after resolving a long-running legal dispute with multinational Kraft Heinz. The US giant will pay Bega’s legal costs, ending a tiff over the Australian company’s right to use distinctive peanut butter packaging.
US-focussed BNPL player Sezzle surged 22.67 per cent on news of a three-year deal with Target. The US retail giant will offer Sezzle’s payment method in-store and across digital platforms. Z1p Co climbed 4.37 per cent. Afterpay added 3.35 per cent.
Mining and engineering services group Worley was among the index’s best performers, rising 7.69 per cent a day after laying out an optimistic future for the company’s shift to greener energy sources. Asset manager IOOF Holdings surged 7.93 per cent.
A production upgrade lifted lithium miner Galaxy Resources 1.01 per cent.
Wesfarmers declined 2.08 per cent after warning growth had moderated following last year’s Covid-fuelled buying spree. The retail conglomerate said some businesses had seen business contract. Online penetration eased but remained above pre-Covid levels.
Some of the mining majors took a breather following yesterday’s surge. Newcrest dipped 0.88 per cent. Rio Tinto edged up 0.05 per cent. Fortescue and BHP overcome early weakness to advance 0.69 and 0.4 per cent, respectively.
Domino’s Pizza hit a new peak before fading 0.03 per cent.
A broadly positive session on Asian markets saw the Asia Dow rise 0.48 per cent, Japan’s Nikkei 0.3 per cent and China’s Shanghai Composite 0.32 per cent. Hong Kong’s Hang Seng slid 0.58 per cent
S&P 500 futures advanced two points or 0.05 per cent.
Oil rose for a third session. Brent crude firmed 51 cents or 0.71 per cent to US$71.86 a barrel.
Gold dipped $6.40 or 0.34 per cent to US$1,903.50 an ounce.
The dollar receded 0.15 per cent to 77.32 US cents.