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The share market mounted a tepid recovery as investors weighed positive leads from Wall Street and weaker-than-expected jobs data in the wake of yesterday’s horror session.
The S&P/ASX 200 climbed 15 points or 0.22 per cent to 6844. The rally recouped less than a tenth of Wednesday’s 181-point plunge.
Gains in energy producers and the big banks outweighed declines in defensive stocks.
What moved the market
The share market regained its footing as the reverberations from Tuesday night’s US inflation shock continued to die down. The S&P 500 bounced 0.34 per cent overnight.
The US benchmark needed a final half-hour recovery to secure a gain, but investors were relieved equities did not add to Tuesday’s fall, the worst in more than two years.
“It is one of those extreme events that doesn’t have follow-through and that tends to be good news, not bad,” Jeff deGraaf, founder and chairman of Renaissance Macro Research, told CNBC.
The ASX 200 briefly doubled its morning gains on news the unemployment rate ticked up last month for the first time since last year’s pandemic lockdowns. The jobless rate rose to a seasonally-adjusted 3.5 per cent from a 48-year low of 3.4 per cent in July as the economy created fewer jobs than expected.
Stocks jumped on hopes the data indicated recent interest rate rises were starting to bite, easing pressure on the Reserve Bank to keep lifting aggressively. The gains dwindled as US futures pared their advance and economists questioned the meaning of the jobs miss.
“While Australia’s unemployment rate edged up 0.1ppt to 3.5% in August, this reflected an increase in participation rather than being a sign of weakness,” ANZ‘s research team tweeted.
AMP said unemployment was a lagging indicator and usually the last part of the economy to show the effects of a downturn.
“The labour market data does not really reflect any impacts from RBA rate hikes which started in May. We expect the unemployment rate to start creeping back up towards 4 per cent by late 2023,” the wealth manager said.
Winners’ circle
Resource stocks rallied after China announced it would lift a Covid lockdown in Chengdu, the capital of Sichuan province. Parts of the city of 21 million people had been in full lockdown since the start of the month.
The relaxing of restrictions helped raise Chinese iron ore prices. That in turn helped lift BHP 0.36 per cent and Fortescue Metals 0.9 per cent.
Coal miners soared as benchmark Newcastle coal futures firmed 2.6 per cent. Coronado rallied 9.14 per cent, New Hope 6.01 per cent and Whitehaven 4.6 per cent.
An overnight rebound in Brent crude helped energy stocks reverse yesterday’s losses. Woodside Energy climbed 4.3 per cent, Santos 3.51 per cent and Beach Energy 3.33 per cent.
The big banks recouped much of yesterday’s sharp declines. ANZ gained 3.44 per cent, NAB 1.6 per cent, Westpac 1.65 per cent and CBA 0.64 per cent.
Myer hit its highest level in three years after declaring its best start to a financial year since 2006. The department store reported strong growth over the first six weeks of FY23, building on an improved FY22 result.
Full-year sales increased by 12.5 per cent in FY22. Net profit more than doubled to $60.2 million. Shareholders will receive a final dividend of 2.5 cents per share. The share price touched 66.5 cents before fading to finish unchanged at 63.5 cents.
Doghouse
Takeover target Link Administration eased 0.85 per cent despite news the Foreign Investment Review Board has no objection to a proposed acquisition of the company by Canada’s Dye & Durham.
Link’s share price crashed 20 per cent on Tuesday after the UK regulator demanded the firm ring-fence $519 million for potential fines resulting from the collapse of a UK fund administered by a Link subsidiary.
Tyro Payments announced Jon Davey will step up to CEO, replacing outgoing chief executive and Managing Director Robbie Cooke. Davey is currently head of Tyro’s health business. The share price eased 3.75 per cent.
Donor management platform Pushpay Holdings dived 9.77 per cent amid media speculation about the potential collapse of takeover discussions. The share price pared its fall after the firm released a statement saying it “remains in compliance with its continuous disclosure obligations” and would keep the market updated.
Lithium miner Lake Resources fell heavily for a second day since reporting a dispute with a key partner. The share price dropped 12.74 per cent to a six-week low.
South32 sagged 7.41 per cent as its shares traded without the right to a bumper dividend.
Shares in lithium miner AVZ Minerals will remain in suspension after the lithium miner secured another extension. The miner’s shares have been suspended since May as a dispute over mining rights in the Congo drags on.
Other markets
A mixed session in Asia saw the Asia Dow fade 0.29 per cent and China’s Shanghai Composite lose 1.56 per cent. Hong Kong’s Hang Seng edged up 0.18 per cent. Japan’s Nikkei gained 0.22 per cent.
A morning rally in US futures ran out of puff. S&P 500 futures were down 1.5 points or 0.04 per cent at the Australian market close.
Oil seesawed around break-even. Brent crude was lately down ten US cents or 0.1 per cent at US$94 a barrel.
Gold tested round-number support at US$1,700, falling US$11.10 or 0.6 per cent to US$1,698 an ounce.
The dollar eased 0.04 per cent to 67.5 US cents.
