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Australian shares rose for a second day as gains in tech and financial stocks offset declines in the energy sector ahead of tonight’s OPEC+ meeting.
The S&P/ASX 200 climbed 14 points or 0.2 per cent following a record finish on Wall Street.
Trading updates fuelled most of the major moves during a generally subdued session. Afterpay, Macquarie Group and CBA were the pick of the heavyweights. Woodside Petroleum, Fortescue Metals and Rio Tinto were the biggest drags on the index.
What’s driving the market
A fourth straight record close for Wall Street’s major indices failed to generate significant buying here following yesterday’s 0.93 per cent jump on the ASX 200. The domestic benchmark put on a modest 27 points at its morning peak, but never threatened yesterday’s intraday high.
A rebound in the dollar and weakness in commodities accounted for some of the restraint. The Aussie bounced back above 74.5 US cents overnight and was recently trading at 74.6 cents. Crude and most industrial metals declined.
Weak retail sales data compounded the lacklustre mood. A record 4.4 per cent decline in sales last quarter will knock around 0.8 per cent off GDP, according to the chief economist of IFM Investors, Alex Joiner.
“Very weak due to lockdowns,” he tweeted. “Department stores, clothing and cafes all smashed.”
The market mood was significantly brighter in the US overnight. The S&P 500 rose 0.65 per cent to the latest in a string of record highs. The Dow and Nasdaq also broke new ground. The gains came after the Federal Reserve announced it will reduce support for the economy from this month.
“The Fed’s tapering announcement is a signal of economic strength, which is good for corporate earnings and markets,” George Ball, chairman of Sanders Morris Harris, told CNBC.
Crude oil continued to retreat ahead of tonight’s OPEC+ meeting. Brent crude sank 91 US cents or 1.1 per cent to US$81.08 a barrel. Oil fell 3.2 per cent overnight to its lowest in around a month after US inventories rose for a second week.
Going up
Buy now pay later leader Afterpay moved closer to being absorbed by Square after the US giant’s shareholders approved the acquisition. Stockholders voted in favour of issuing new stock to Afterpay shareholders, satisfying a key condition for the takeover to proceed. Afterpay shares climbed 1.81 per cent.
Adbri put on 2.63 per cent after acquiring a concrete and quarry business. The construction materials manufacturer will pay $58 million for Zanows, a Queensland operator of two concrete plants, a sand and gravel quarry and a hard rock quarry.
Rival CSR rose 4.83 per cent on news half-year net profit jumped 30 per cent to $86.6 million despite Covid headwinds. The firm said its largest business, Building Products, was performing well.
An 8.5 per cent increase in first-quarter premium income helped lift health insurer NIB 4.44 per cent. New Chair David Gordon told shareholders membership increased by 3,800, placing the insurer on track to achieve targetted growth of 3 per cent for the full year.
Z1p Co gained 0.3 per cent after lifting Australian and New Zealand transaction values by 48 per cent last quarter and revenues by 41 per cent. CEO Larry Diamond told shareholders the company was preparing to enter the Singapore market through a partnership with Singtel Dash, a mobile wallet app, and had signed a deal with a US banking partner.
Macquarie Group rallied 1.04 per cent to within 30 cents of last week’s record. CBA gained 0.69 per cent and ANZ 0.4 per cent. NAB dipped 0.45 per cent and Westpac 0.15 per cent.
Other heavyweight gainers included Wesfarmers +0.41 per cent, Coles +0.4 per cent and Telstra +0.38 per cent.
Going down
Domino’s Pizza slumped 12.43 per cent after outlining major expansion plans and warning of inflationary pressures on costs. CEO and Managing Director Don Meij told the AGM the fast-food group intends to open a record number of stores this year.
“We are targeting FY22 to be the largest expansion of our store footprint in our Company’s history,” he said.
Anticipated headwinds this year include rising energy and food costs. Increased unit sales are intended to offset “short-term inflation”. The company also warned sales growth across its regions had been “uneven”. Goldman Sachs and Citi both cut their price targets.
Poultry producer Inghams eased 3.3 per cent after warning of pressures from shipping costs for feed. CEO Andrew Reeves told today’s AGM “sustained input cost pressures have the potential to place upward pressure on market pricing”.
Energy stocks declined with crude. Woodside Petroleum shed 2.86 per cent, Beach Energy 3.86 per cent and Santos 2.97 per cent.
Most of the iron ore majors retreated in the wake of Tuesday’s 18-month low in spot prices. Fortescue Metals gave up 0.94 per cent, Rio Tinto 0.93 per cent and Champion Iron 2.58 per cent. BHP put on 0.46 per cent.
Other markets
An upbeat session on Asian markets saw the Asia Dow rise 0.62 per cent, China’s Shanghai Composite 0.29 per cent, Hong Kong’s Hang Seng 0.48 per cent and Japan’s Nikkei 0.89 per cent.
US futures marked time. S&P 500 futures were recently ahead less than a point or 0.01 per cent.
Gold bounced US$11.80 or 0.67 per cent to US$1,775.70 an ounce from last night’s pre-Fed update decline.
