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Travel companies surged for a second day and tech stocks slumped as the share market recorded its first meaningful advance in more than a week.
The S&P/ASX 200 rose 58 points or 0.86 per cent, its best return since last Monday. The index had fallen for the three of the previous four sessions. The only break in the run of losses was an upward blip of less than a point last Thursday.
What moved the market
Travel companies, oilers and miners spearheaded today’s gains amid optimism over the economic outlook following the start of the national vaccination program and overnight gains in commodity prices. BHP and Rio Tinto hit new records. Tech stocks that prosper when borrowing costs are low took a heavy hit.
“Investors are quickly rediscovering that not all stocks are created equal in a Covid recovery as expensive tech names sell to provide the source of funds for less expensive travel-related markers, along with energy and other inflation beneficiaries,” Stephen Innes, Chief Global Market Strategist at Axi, wrote. “But thankfully for society at large, there’s more optimism than fear today.”
The scale of a growth-to-value rotation going on in the US was underlined by a sharp divergence in the major indices overnight. While the Dow edged up 0.09 per cent, the tech-heavy Nasdaq dived 2.46 per cent. The broader S&P 500 lost 0.77 per cent.
“Tech-sector valuations have become extremely sensitive to changes in 10-year bond yields,” Innes said. “So, for stock markets with a high-weighting to tech, such as in the US Index, the valuation impact from a rise in bond yields can be very steep.”
The Australian tech sector dived 4.1 per cent to a one-month low. Afterpay slumped 7.2 per cent, Nearmap 6.1 per cent and Megaport 4.5 per cent. The sector briefly tripled in value during the market rebound from the March lows.
Winners’ circle
The materials sector hit its highest level since 2008, fuelled by overnight gains in iron ore and industrial metals. Market heavyweights BHP and Rio Tinto gained 3.1 and 1.8 per cent, respectively, hitting all-time highs. Fortescue Metals added 0.4 per cent.
Woodside Petroleum rebounded 5.7 per cent from three days of post-earnings weakness. An overnight reversal in gold lifted Newcrest 4.4 per cent.
Travel and tourism stocks saw a second day of strong gains following the weekend launch of the national vaccination program. Corporate Travel Management rallied 9.8 per cent, Sydney Airport 6.5 per cent, Flight Centre 6.2 per cent and Qantas 4.4 per cent.
The market built steadily following a late-morning rise in the banks. Westpac gained 1.9 per cent, CBA 1.7 per cent, ANZ 1.2 per cent and NAB 1.1 per cent. Bank of Queensland jumped 12.8 per cent after raising $673 million from institutional investors to buy ME Bank.
Oil Search soared 6.4 per cent as investors bet on a return to profit as energy prices recover. The oil and gas giant reported a full-year net loss of $320.7 million, reflecting last year’s Covid-induced collapse in energy markets.
Adbri almost doubled its full-year net profit to $93.7 million and beat profit guidance. Shares in the construction materials supplier surged 10.4 per cent. A 19 per cent lift in half-year revenue to $947.8 million lifted engineering group Monadelphous 4 per cent.
Professional services firm Worley rallied 3.3 per cent in anticipation of a recovery as it executes on a $13.5 billion backlog of deferred projects. Underlying net profit almost halved to $117 million last half as customers postponed work.
Estia Heath added 2.5 per cent as investors looked beyond a $5.3 million half-year post-tax loss. The aged care operator said it made a $3.8 million profit before impairments and a hit from settling a shareholder class action.
Doghouse
SEEK sank 7.1 per cent after announcing a 6 per cent decline in half-year revenue and a reshuffle at the top. Andrew Bassat will move from CEO and MD to Executive Chairman and CEO of SEEK Investments. Former bank CEO Ian Narev will succeed him as CEO and MD.
The rising dollar impacted revenues at Perenti Global, which generates more than half its business in the US. Shares in the mining services company dived 12.6 per cent
Utility APA Group dipped 1.2 per cent to an 11-month low after reporting a 0.6 per cent decline in half-year revenue and 2.3 per cent drop in earnings. A 31 per cent slump in net profit dragged Alumina down 2.1 per cent.
Ship builder Austal sank 10.9 per cent on news the president of its US operations had resigned following an investigation into its Littoral Combat Ship program. US authorities are investigating several matters relating to the program prior to 2016. Austal said it was cooperating with regulators.
A $187 million statutory full-year loss dragged G8 Education down 7.3 per cent. The childcare centre operator’s business took a heavy hit from Covid lockdowns.
A record half briefly lifted Adore as much as 11 per cent before shares in the beauty products retailer faded to a loss of 3.7 per cent. The online business posted half-year revenue of $96.2 million, eight per cent ahead of the prospectus forecast when the company listed in October.
Wesfarmers shed 3.2 per cent as it traded without its dividend.
Other markets
The Asia Dow climbed 0.92 per cent as regional markets built momentum. China’s Shanghai Composite gained 0.34 per cent and Hong Kong’s Hang Seng 1.48 per cent. Japanese markets were closed for a bank holiday.
S&P 500 futures rose 19 points or 0.5 per cent.
Oil built on a 12-month overnight high. Brent crude rallied $1.03 or 1.6 per cent to $US65.39 a barrel.
Gold inched up $3.60 or 0.2 per cent to $US1,812 an ounce.
One consequence of the surge in commodity prices has been a three-year high in the dollar. The Aussie hit 79.3 US cents overnight and was lately up 0.07 per cent at 79.19 US cents.
