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End-of-month buying and positive signs for tomorrow’s economic growth figures helped lift the share market to a two-week high.

The S&P/ASX 200 built to a gain of 30 points or 0.41 per cent for the last session of August. The end of the month often sees increased buying as investment managers rebalance portfolios.

For the month, the index put on 142 points or 1.9 per cent. The rally kept intact a winning streak that has stretched since last September. The index has risen for 11 straight months, and for 16 of the 17 months since the original pandemic market crash bottomed in March 2020.

What moved the market

High-growth stocks and bond proxies provided the momentum this session as bond yields responded to the US Federal Reserve’s pledge to keep official lending rates at a record low for some time to come. Fed Chair Jerome Powell reassured investors at the end of last week that the US economy had some way to go before meeting the bank’s target for raising rates.

Australian government bond yields followed their US counterparts lower, crimping buying interest in lenders but boosting stocks whose valuations depend heavily on the cost of borrowing. The tech sector surged almost 2 per cent back towards last week’s all-time high.

Appen climbed 6.97 per cent, WiseTech 5.73 per cent, Nextdc 3.52 per cent and Afterpay 1.72 per cent.

The market shrugged off disappointing data from trading partner China as domestic reports encouraged optimism about tomorrow’s GDP numbers. The Australian current account surplus jumped to a record $20.5 billion last quarter as strong commodity prices helped offset a decline in volumes. July credit data was also stronger than expected.

Government spending increased 2.5 per cent. The rise will add 0.7 of a percentage point to tomorrow’s Q2 GDP figure, possibly enough to avoid a technical recession. A negative result tomorrow would mean the economy was in recession, with the current quarter certain to show a contraction in activity. The dollar firmed 0.53 per cent to 73.29 US cents.

“We now think that GDP scraped out a rise of 0.1% in the second quarter, narrowly avoiding a technical recession,” Ben Udy, economist at Capital Economics, told Reuters.

The Shanghai Composite was last up 0.03 per cent after data showed a slowdown in Chinese factory activity growth and a contraction in the services sector. The non-manufacturing PMI fell to 47.5, its lowest since the February 2020 contraction. The manufacturing PMI dipped more than expected to 50.1 from 50.4 in July.

The Asia Dow reversed to a gain of 0.9 per cent. Japan’s Nikkei rallied 1.24 per cent. Hong Kong’s Hang Seng trimmed a sharp early fall to 0.16 per cent.

Overnight, the S&P 500 and Nasdaq Composite closed at all-time highs as gains in Big Tech offset weakness in banks that see margins contract when lending rates decline.

Winners’ circle

Among the heavyweights outside of the tech space, bond proxies offered the best returns. Goodman Group rose 2.3 per cent, Coles, 1.74 per cent, Aristocrat Leisure 1.42 per cent and CSL 0.53 per cent.  

Net profit at nickel and lithium miner IGO soared 254 per cent to $549 million during a “transformational year”. Nickel production at the miner’s flagship Nova mine exceeded guidance. The company sold its Tropicana gold mine during the year and launched a lithium joint venture with Tianqi. The share price edged up 1.37 per cent.

Regis Healthcare firmed 5.08 per cent after returning to profit. The aged care provider swung from a full-year loss of $0.7 million in FY20 to a profit of $19.9 million last financial year as occupancy rates improved.

Webjet rallied 3.45 per on news it expects to be cashflow positive this half as its US and European businesses recover. The company said its WebBeds business-to-business operation had been profitable since July.

“We have seen strong demand as travel restrictions ease in North America and Europe, suggesting significant upside as more international markets reopen,” the company said.

PointsBet rallied 1.67 per cent after more than doubling revenues to $194.7 million. Gross profit also more than doubled to $87.6 million. Increased spending on marketing helped push the wagering group’s loss for the year out to $164.3 million. The company has been spending to expand its presence in the US. Marketing expenses in the US rose to $119.2 million.

The Market Herald, publisher of this website and owner of the HotCopper forum, increased full-year revenue 91 per cent to $23 million. Before-tax profit surged to $13.1 million from $722,348 in FY20. Cash receipts increased 80 per cent to $21.9 million. The share price rallied 10.77 per cent to a six-month peak.

Doghouse

Biotech Mesoblast sank 15.91 per cent as its regulatory struggles in the US continued. The US Food & Drug Administration advised the company it needs another clinical study before its lead product could be approved for emergency use for treating Covid-19 ARDS (acute respiratory distress syndrome). The company declared a full-year loss of $98.8 million after spending $53 million on research and development.

Harvey Norman retreated 3.24 per cent after reporting a lockdown-fuelled downturn in sales and returning $6 million in JobKeeper payments. The retailer increased half-year earnings by more than half a billion dollars to $1.457 billion, but warned rolling lockdowns had affected sales over the last two months. The company expects pent-up demand to boost sales when its major markets reopen.  

A 27 per cent decline in full-year profit helped push Regis Resources down 3.52 per cent. Higher revenues from gold sales were offset by increased mining costs, as well as depreciation and amortisation charges.

Buy now pay later player Splitit eased 1.11 per cent to a 14-month low as news of a 94 per cent improvement in half-year merchant sales volumes was offset by the departure of CEO Brad Peterson. Veteran retail sales executive John Harper will act as interim CEO until a permanent replacement is found. The half-year loss blew out to US$18.77 million from roughly $9 million over the prior corresponding period.

Among other companies reporting, Shaver Shop rose 4.9 per cent and Dubber 9.04 per cent. Bubs fell 2.38 per cent. Sandfire finished unchanged.

Worley dropped 3.76 per cent and Link Administration 0.68 per cent as they traded without the right to a dividend.

Other markets

US futures built steadily as Asian markets trimmed losses. S&P 500 futures were recently ahead 15 points or 0.32 per cent.

Oil pared early losses. Brent crude was last off two US cents or 0.03 per cent at US$72.21 a barrel, about 50 cents off this morning’s low.

Gold firmed US$7.60 or 0.42 per cent to US$1,819.80 an ounce.

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