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The share market hit a six-week high on the final session of a positive quarter following signs Queensland was containing the nation’s latest coronavirus outbreak.
The S&P/ASX 200 touched 6863 before a late retreat more than halved its tally to 52 points or 0.78 per cent at 6791.
Today’s rally boosted the index’s gain for the quarter to 204 points or 3.1 per cent. The index has risen on three of the four quarters since the initial pandemic plunge climaxed last March.
What moved the market
The ASX shrugged off weak leads from Wall Street and commodity markets as bonus-conscious fund managers lifted the market for the end of the quarter. Institutional traders whose performance is measured by quarterly returns have an incentive to put the possible spin on their portfolios, a quarterly phenomenon known as “window dressing“. The short-term sugar hit to share prices often wears off next session.
“It seems to defy gravity,” Jun Bei Liu, portfolio manager at Tribeca Investment Partners, told Nine media. “It is quarter end and month end, generally you see a fair bit of window dressing because fund manager performance is measured quarterly… Tomorrow might reverse,” she warned.
The market briefly recouped two days of falls triggered by a Covid-19 outbreak in Queensland. Hopes a three-day lockdown in Greater Brisbane will be lifted tomorrow were sharpened by news the state recorded just two locally-transmitted cases yesterday, down from eight the previous session.
“If it’s encouraging news tomorrow, we will be lifting the hotspot for Greater Brisbane,” State Premier Annastacia Palaszczuk said.
Overnight, US stocks retreated as bond yields hit 14-month highs and investors fretted about the fallout from the collapse of a private hedge fund. The S&P 500 and Dow both shed around 0.3 per cent.
Winners’ circle
Sixteen of the 20 heavyweights of the ASX 20 rallied. Roughly three-quarters of the broader ASX 200 advanced.
BHP climbed 0.9 per cent to its highest level in two weeks. Rio Tinto added 1.1 per cent. Fortescue Metals faded to a loss of 0.6 per cent.
Pokie-maker Aristocrat Leisure trimmed a three-day decline, rising 2.2 per cent. Supermarkets Coles and Woolworths added 1.8 and 1.5 per cent, respectively. Wesfarmers and CSL gained 0.8 per cent, Transurban 2.6 per cent and Goodman Group 0.4 per cent.
A sharp increase in bond yields over the last 24 hours lifted lenders. The Australian ten-year yield jumped more than ten basis points to 1.82 per cent. CBA rose 0.8 per cent, ANZ 0.3 per cent, NAB 0.4 per cent and Westpac 0.2 per cent. Macquarie Group put on 1.5 per cent.
Travel agents and other “reopening” stocks were lifted by the Queensland news. Sydney Airport gained 3.9 per cent, Webjet 2.2 per cent, Flight Centre 2 per cent and Qantas 1.8 per cent.
Beleaguered gold miner Resolute bounced 4.8 per cent from five-year lows after reaffirming production and cost guidance. The share price crashed last week after the Ghanaian government terminated the lease for the company’s Bibiani mine.
The session’s best performers were a motley crew. Shopping centre operator Unibail-Rodamco-Westfield added 6.4 per cent, Champion Iron 6.2 per cent and toll road operator Atlas Arteria 5.7 per cent.
Doghouse
The sudden surge in borrowing costs spelled bad news for tech companies and other industries whose valuations depend on future earnings. Appen shed 3.1 per cent and Nanosonics 1.9 per cent. Openpay slid 4.2 per cent after tapping investors for $76.5 million. Afterpay bounced 0.5 per cent from its lowest level since December.
Telstra hit a new seven-month peak before reversing to close 0.9 per cent in the red. Woodside Petroleum eased 0.3 per cent.
Gold miners followed the yellow metal south. Overnight, gold skidded 1.7 per cent as rising yields and a strong greenback dulled its appeal. Here, Northern Star eased 2.8 per cent, Evolution 2.4 per cent, Ramelius 3.6 per cent and Newcrest 0.9 per cent.
Myer faded 5.9 per cent after announcing the closure of its Knox outlet in Victoria as part of the department store’s rationalisation as online sales increase. Harvey Norman shed 3.7 per cent as it traded without its dividend.
Other markets
Asian markets deteriorated as the session progressed. By the Australian close, the Asia Dow was down 0.54 per cent. China’s Shanghai Composite dropped 0.61 per cent, Hong Kong’s Hang Seng 0.31 per cent and Japan’s Nikkei 0.7 per cent. Dow and S&P 500 futures were dead flat.
Oil rebounded from overnight weakness as traffic resumed through the Suez Canal. Brent crude bounced 36 cents or 0.6 per cent to US$64.53 a barrel. Gold faded $5.90 or 0.4 per cent to US$1,680.10 an ounce.
The dollar dipped 0.1 per cent to 76.02 US cents.
