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A cash splash from the nation’s biggest bank and a rebound in mining stocks helped the share market crack 7600 for the first time.

The S&P/ASX 200 climbed as high as 7615 in morning trade, but more than halved its gains as US equity futures faded. The index closed 22 points or 0.29 per cent ahead for the session at 7584.

Commonwealth Bank accounted for much of the advance. BHP and Rio Tinto recorded solid gains for the first time in four sessions. Bond proxies declined as yields on both sides of the Pacific continued to improve.

What moved the market

Today’s session continued a six-session run of record highs. Early strength in banking and mining stocks gave way to caution ahead of inflation data with the power to alter the US rates outlook.

US futures eased into tonight’s Consumer Price Index. S&P 500 futures faded four points or 0.1 per cent.

“A deluge of inflation data is scheduled to be released this week, exhibiting movements in consumer prices, producer prices, and import prices. Investors are primarily looking up to consumer inflation, which exploded this year and reached a 13-year high level in June,” Kalkine Group CEO Kunal Sawhney said.  

“A group of experts continues to worry that inflation could persist above the central bank’s target range for the long run. Concerns loom that a further spike in inflation could force the Federal Reserve to increase interest rates sooner than it would like. And if price pressure pinches hard enough, it could prompt millions of Americans to spend lesṣ, potentially derailing economic growth,” he added. 

Investors applauded a strong result from the ASX’s largest company by market capitalisation. CBA shares traded as high as $109.03 before shaving their advance to 1.51 per cent at $108.17.

The bank will launch a buyback to return excess capital after increasing cash net profit by 19.8 per cent to $8.653 billion. Shareholders will receive a final dividend of $2 per share. This year’s full-year payout of $3.50 is 17 per cent higher than last year.  

Westpac’s consumer sentiment survey continued this month’s run of lockdown-affected economic disappointments. The confidence index fell 4.7 points or 4.4 per cent to 104.1.

The Victorian government announced an extension to the current state lockdown until at least August 19. New South Wales reported 344 new local cases, Victoria 20 cases and Queensland four cases.  

US stocks moved mostly higher overnight after the Senate passed the White House’s US$1 trillion infrastructure package. The Dow rose 0.46 per cent to a record. The S&P 500 edged up 0.1 per cent. The Nasdaq eased 0.49 per cent.

Winners’ circle

CBA’s result and a burgeoning recovery in lending rates kept the banks well-bid. ANZ climbed 1.21 per cent to a near two-month high. NAB rallied 0.93 per cent and Westpac 0.74 per cent.

The miners took in their stride a collapse in iron ore prices to their lowest since March. Spot ore landed at Tianjin fell 5.3 per cent yesterday to US$162.20 a tonne. BHP put on 1.47 per cent and Rio Tinto 1.29 per cent. Fortescue Metals inched up 0.04 per cent.

Energy stocks rebounded with crude prices. Woodside Petroleum rose 0.46 per cent, Santos 1.43 per cent and Oil Search 1.29 per cent.

Supermarkets caught an updraft from the Victorian lockdown extension. Woolworths climbed 0.3 per cent to a record. Coles gained 0.72 per cent.

Nufarm jumped 3.21 per cent after the US regulator recognised the firm’s omega-3 canola oil as a new dietary ingredient. The company said recognition by the US Food and Drug Administration would open doors for the oil as a plant-based alternative to fish-derived omega-3.

Mineral Resources closed almost unchanged, up 0.02 per cent, following news costs at its Yilgarn iron ore mine were expected to rise by up to 10 per cent this financial year. The increase overshadowed a strong full-year result from the ore/lithium miner. Revenues increased 76 per cent and underlying earnings by 148 per cent. The miner will pay a final dividend of $1.75 per share.

Signs of a pick-up in earnings helped Computershare overcome a soft start after reporting an 18.8 per cent decline in full-year profit. The share registry said earnings increased by 39 per cent over the second half of the year. Earnings per share are expected to grow by 4 per cent this financial year as Covid’s impact abates. The share price firmed 0.74 per cent.

An improved bid from European private equity giant EQT boosted Iress by 5.78 per cent. EQT raised its offer a second time to $15.91, including a 16 cent interim dividend. The board has granted its suitor 30 days to undertake due diligence.

Doghouse

IAG touched a six-month high before fading 2.65 per cent after reporting a full-year loss of $427 million, as flagged last month. Shares initially rallied on news the insurer expects to improve margins next year and see low single-digit growth in gross written premiums.  

Rising borrowing costs are a two-edged sword, lifting lenders while undermining valuations of growth companies that depend on borrowing to fund future growth. The tech sector wilted 0.67 per cent as Megaport fell 6.31 per cent, Nearmap 2.26 per cent, Xero 1.84 per cent and Afterpay 0.8 per cent.  

A broker downgrade from Citi pulled shoe retailer Accent Group down 6.79 per cent.

Other markets

The Asia Dow climbed 0.54 per cent, China’s Shanghai Composite 0.17 per cent, Hong Kong’s Hang Seng 0.18 per cent and Japan’s Nikkei 0.53 per cent.

Oil added to an overnight rebound, its first advance in three sessions. Brent crude inched up three US cents or 0.04 per cent to US$70.66 a barrel.

Gold improved US$2.70 or 0.16 per cent to US$1,734.40 an ounce.

The dollar eased 0.06 per cent to 73.39 US cents.

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