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Well-received profit updates helped the market push further into record territory as gains in banks outweighed declines in miners.

The S&P/ASX 200 took an hour to warm up, but gained traction as the morning wore on. At the halfway mark, the index was ahead 16 points or 0.21 per cent.

Furniture retailer Nick Scali and industrial property giant Centuria hit all-time highs after reporting earnings.   

A record for Wesfarmers and gains in Telstra, CSL and the banks helped offset declines in Woodside, BHP and Fortescue Metals.

What’s driving the market

The domestic earnings season is in its infancy, but showing promising signs. Industrial storage king Centuria hit an all-time high on news full-year statutory net profit soared to $611.2 million from $75.3 million in FY20.

Funds from operations increased to $91.4 million from $63.5 million. The trust benefitted from acquisitions and strong demand for cold storage and data centres. The share price rose as high as $3.93 before trimming its advance to 0.78 per cent at $3.88.

Nick Scali also set a high after announcing full-year profits doubled. Online sales increased from $3 million in FY20 to $18.3 million last financial year. Store sales saw revenue growth of 34 per cent. The share price hit a record $12.96 before drifting 0.97 per cent to $12.20.

The month-long reporting season hots up next week with reports from CBA, AMP, Telstra, IAG, Suncorp, QBE, Transurban and AGL.

Helping sentiment in the financial sector, Bendigo & Adelaide Bank announced it would release some of the cash buffer it set aside against the impact of the pandemic. The bank said it would release $19.4 million. The share price climbed 1.1 per cent.

“The Collective Provision release reflects the improved economic outlook for the Australian economy, including rising GDP, lower unemployment and higher residential property prices compared to 31 December 2020,” the bank said.  

The market slowly shook off negative leads from Wall Street and commodity markets. The Dow dropped 0.92 per cent overnight and the S&P 500 shed 0.46 per cent after payrolls data disappointed and the Federal Reserve gave further clues it is preparing to reduce support for the economy.

ADP private payrolls rose by just 330k against expectation for a 690k rise, the smallest gain since February,” NAB currency strategist Rodrigo Catril said.Cautious remarks by ADP’s chief economist, Nela Richardson, didn’t help sentiment either, noting that the July report was a marked a ‘slowdown from the second quarter pace in jobs growth’,” he added.

The odds on a US rate rise in early 2023 firmed after Fed Vice Chair Richard Clarida indicated he expected the economy to be strong enough by the end of next year.

“Fed Clarida said that based on his outlook for inflation and employment then the ‘necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022’, cementing in market expectations that the Fed Funds rate would likely rise from early 2023,” Mr Catril said. Clarida also said he would support a reduction in the scale of central bank support this year.

Going up

The banks continued to heal from the deadening effect of the Greater Sydney lockdown. The financial sector has been held in check by a collapse in lending rates and the threat of a surge in bad debts.

Commonwealth Bank rallied 1 per cent to its highest since mid-June. ANZ edged up 0.27 per cent, NAB 0.57 per cent and Westpac 0.08 per cent.

Businesses that generate much of their earnings in US dollars benefitted from an up-tick in the greenback. Overnight, the US dollar index inched to its highest level in a week.

Aristocrat Leisure put on 2.19 per cent, CSL 0.39 per cent and Macquarie Group 0.35 per cent.

REITs were among the pick of the sectors following Centuria’s result. Unibail-Rodamco-Westfield gained 2.62 per cent, Goodman 1.88 per cent and Abacus 1.88 per cent.

Wesfarmers notched a second straight record, rising 1.28 per cent. Other notable gains included Woolworths +0.51 per cent, Coles +0.39 per cent and Telstra +0.13 per cent.

Gold miner Resolute rallied 4.5 per cent after striking a deal of sell its Bibiani mine in Ghana to Canadian miner Asanate Gold for US$90 million. The deal has the approval of Ghana’s Minister of Lands.

Going down

A stop-start week for bulk metal miners continued with a reversal of yesterday’s gains. The big three have struggled for traction as the spread of the delta Covid-19 variant in China depressed commodity prices. Overnight, iron ore, copper and crude declined.

BHP retreated 0.94 per cent, Fortescue Metals 0.75 per cent and Rio Tinto 0.41 per cent. Woodside Petroleum shed 1.5 per cent.

The index’s worst performers were a mixed bag. Biotech Mesoblast shed 3.47 per cent, miner Chalice 2.77 per cent and payments platform EML 2.55 per cent.

Other markets

US futures rebounded as Asian markets advanced. S&P 500 futures climbed nine points or 0.2 per cent.

The Asia Dow crept up 0.17 per cent, China’s Shanghai Composite 0.05 per cent, Hong Kong’s Hang Seng 0.36 per cent and Japan’s Nikkei 0.29 per cent.

Oil rose for the first time in four sessions. Brent crude rallied 24 US cents or 0.34 per cent to US$70.62 a barrel.

Gold retreated US$2.80 or 0.15 per cent to US$1,811.70 an ounce.

The dollar inched up 0.06 per cent to 73.86 US cents.

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