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Australian shares logged their biggest rise in seven weeks as financial markets showed signs of moving on from the US rate and Chinese property worries that have depressed buying interest this month.
The S&P/ASX 200 rallied 73 points or 1 per cent to a third straight advance. Today’s rise was the largest since a 99-point surge on August 2. The index has clawed back all but 34 points of Monday’s 155-point plunge, the market’s heaviest loss since February.
Tech and energy stocks led the charge, with support from the banks and most of the miners. Declines in Transurban, BHP and the supermarkets kept gains in check.
What moved the market
Investors piled back into the market after Wall Street notched its biggest rise in two months. The S&P 500 rallied 0.95 per cent to its first gain in five sessions. The Dow put on 1 per cent after the Federal Reserve signalled the economy had improved enough to reduce support – just not yet.
“The Fed struck a positive tone, acknowledging that the economy is strong enough to stand on its own two feet and the central bank can begin removing the monetary stimulus that they’ve been providing since the beginning of the Covid crisis,” Chris Zaccarelli, CIO at Independent Advisor Alliance, told CNBC.
Fears of a messy corporate collapse in China receded after developer Evergrande struck a deal with mainland bondholders. Shares in the troubled property giant rallied 19.8 per cent today, fuelling a 0.9 per cent rebound on Hong Kong’s Hang Seng index.
“Yesterday’s news that some (unspecified) arrangement has been agreed between Evergrande and owners of a domestic bond on which coupon payments were due today had been reached, helped foster a view Evergrande is not going to be allowed to collapse in a heap,” NAB Head of FX Strategy Ray Attrill said.
China’s Shanghai Composite gained 0.41 per cent. The Asia Dow added 0.28 per cent. S&P 500 futures firmed 14 points or 0.3 per cent. Japanese markets were closed for a holiday
The corporate regulator, ASIC, took the unusual step today of issuing a warning about organised “pump and dump” activity on the ASX. The commission said coordinated campaigns to “pump” stock prices could be market manipulation in breach of the Corporations Act. Breaches can attract fines of more than $1 million and up to 15 years in prison.
“ASIC expects participants to promptly submit suspicious activity reports where they see this type of activity. Investors and consumers are also encouraged to report misconduct to ASIC,” the commission said.
Winners’ circle
An upbeat session saw gains across most of the index’s major players. Afterpay led the charge with a rise of 4.21 per cent. The big four banks put on between 0.6 and 1.2 per cent.
Macquarie Group gained 2.61 per cent, Telstra 0.76 per cent and Wesfarmers 0.45 per cent. Miner Fortescue Metals rallied 1.04 per cent and Rio Tinto 0.6 per cent. BHP faded 0.72 per cent.
Woodside Petroleum climbed 1.68 per cent to a fresh five-week high. Santos gained 2.85 per cent, Oil Search 3.38 per cent and Beach Energy 4.42 per cent.
Most of the insurers rebounded from yesterday’s earthquake-induced tremors. Suncorp rallied 1.64 per cent and QBE 2.68 per cent. IAG faded 0.62 per cent after reporting 435 claims in the wake of yesterday’s quake in Victoria. The company said it was too early to determine the full financial impact of the event.
Record full-year earnings lifted Premier Investments 3.06 per cent. The retail group almost doubled earnings from last year’s Covid-affected result, rising 88 per cent to $351.9 million. Net profit climbed 97.3 per cent to $271.8 million. Chair Solomon Lew said he was optimistic about the outlook despite temporary store closures impacting the first seven weeks of the new trading year.
“Premier remains optimistic about the all-important second quarter of FY22 as the vaccine rollout progresses and the economy re-opens,” he said. “Premier Retail has again made the strategic decision to invest in inventory and we have the appropriate supply chains to support this decision and ensure we are in stock of wanted product.”
News Corp jumped 8.42 per cent on plans to buy back up to US$1 billion of its stock. CEO Robert Thomson said the buyback was a sign of confidence in the business following the media group’s most profitable year since at least 2013.
AGL rose 5.28 per cent on a broker upgrade from JPMorgan Chase. Analyst Mark Busuttil raised his rating to ‘Overweight’.
Diversified metals miner Sandfire Resources entered a trading halt to raise funds to buy the MATSA mining complex in Spain for $2.572 billion. The “transformational acquisition” includes three underground mines and a processing facility. Sandfire will tap investors for $1.248 billion.
Sandfire said, “The acquisition of MATSA is expected to be accretive to Sandfire’s earnings and cash flow per share in its first full year of ownership (FY23), transforming Sandfire’s growth trajectory and providing a cornerstone asset with an anticipated mine life of over 10 years.”
Shares in recapitalised uranium hopeful Aura Energy returned to the boards at a massive premium to its most recent raising. The company said it had $1.7 million in the bank after raising $4.2 million at 2.6 cents per share.
The share price opened more than 1,200 per cent above the raising price at 33 cents. Early buyers were left nursing losses as the shares finished at 26 cents.
Doghouse
Transurban eased 0.44 per cent after completing the institutional component of a raising to fund its share of the NSW Government’s stake in the WestConnex toll road in Sydney. The institutional offer raised $2.9 billion. A retail offer on the same terms opens on September 27.
Supermarket Woolworths eased 0.48 per cent and Coles 0.06 per cent.
Most gold stocks declined. Ramelius shed 1.41 per cent, Northern Star 1.4 per cent and St Barbara 1.05 per cent.
Telix sagged 5.59 per cent after the US regulator extended the review period for the company’s prostate cancer imaging product by three months. Shares in the cancer imaging specialist have more than tripled this year as its flagship product moved closer to market.
Other markets
Gold faded with demand for havens. The yellow metal dropped US$12.50 or 0.7 per cent to US$1,766.10 an ounce.
Oil added to last night’s rise. Brent crude rose 23 US cents or 0.3 per cent to US$75.62 a barrel.
The dollar improved 0.19 per cent to 72.44 US cents.
