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The S&P/ASX 200 neared 6800 for the first time since the start of the pandemic after an iron ore production upgrade from mining giant BHP reaffirmed strong Chinese demand for raw materials.
The benchmark index surged 37 points or 0.5 per cent, peaking at 6788, a level last seen in late February.
What’s driving the market
The heavily-weighted mining sector provided much of the momentum as BHP rumbled 1 per cent higher towards last Friday’s record. The Big Australian reported record half-year iron ore production in WA and raised its guidance following the restart of its Brazilian operations last month. Copper production was flat. The company warned it will take an impairment charge of US$1.15 – US$1.25 billion relating to its coal operations.
Elsewhere in the mining sector, Lynas Rare Earths gained 4 per cent, Newcrest 1.2 per cent, South32 1 per cent and Rio Tinto 0.6 per cent. Fortescue Metals declined 0.6 per cent.
US futures rallied ahead of the inauguration tonight of President-elect Joe Biden. S&P 500 futures rose six points or 0.2 per cent, assisted by a 12.2 per cent surge in Netflix. The streaming service reported earnings following the end of the regular session this morning.
Earlier, US stocks advanced after Treasury Secretary nominee Janet Yellen backed calls for more stimulus. The former Fed Chair said the federal government should “act big” to power the economy out of its pandemic slowdown. The S&P 500 rose 0.81 per cent.
Going up
Buy now pay later companies rallied after Jefferies raised Afterpay to a ‘Buy’, citing expansion opportunities in Asia and Europe. Afterpay shares surged 3.6 per cent to a new peak. The company’s market capitalisation is now larger than Telstra, Coles or Woodside Petroleum. Z1P Co climbed 1.9 per cent, Splitit 0.7 per cent and Laybuy Group 1.8 per cent.
A rebound in US tech giants overnight helped the local sector. WiseTech rose 4.9 per cent, Technology One 3.6 per cent and Bravura Solutions 3 per cent.
Energy stocks rose after overnight strength in oil made the sector Wall Street’s best performer. Beach Energy gained 2.9 per cent, Woodside 1.6 per cent and Santos 1.1 per cent. Brent crude edged up 19 cents or 0.3 per cent this morning to $US56.09 a barrel, extending last night’s 2.1 per cent advance.
Other notable gains at the top end of the market included Transurban +4.1 per cent and Aristocrat Leisure +4.7 per cent. Wesfarmers gained 0.6 per cent, Coles 0.3 per cent and CSL 0.1 per cent.
A profit upgrade lifted Ansell 3.6 per cent. The company said it had seen strong demand for its personal protection products, due to Covid-19. Meditech Polynovo jumped 6.3 per cent on news it had signed distribution deals for its products in Turkey and Poland.
A new field services contract with Telstra worth $330 million over five years lifted engineering and construction group Downer EDI 2.2 per cent. Telstra shares rose 0.3 per cent.
Going down
Real estate investment trusts struggled after a rise in US bond yields sucked funds out of alternative investments. Goodman Group fell 0.5 per cent. BWP Trust slid 2.5 per cent, Charter Hall Retail 2.1 per cent and Scentre Group 1.9 per cent. Supermarket Woolworths dipped 0.1 per cent.
The big four banks were mixed. Declines in CBA -0.5 per cent and ANZ -0.4 per cent outweighed advances of 0.3 per cent in Westpac and 0.2 per cent in NAB.
Aged care provider Regis Healthcare tumbled 8.4 per cent after suitor Washington H. Soul Pattinson abandoned its takeover attempt. WHSP announced it had withdrawn its proposal after the Regis board knocked back two indicative offers. WHSP shares fell 1.4 per cent.
Other markets
A subdued session in Asia saw China’s Shanghai Composite ease 0.1 per cent, Hong Kong’s Hang Seng add 0.5 per cent and Japan’s Nikkei shed 0.5 per cent.
Gold edged up $4.70 or 0.2 per cent to $US1,844.90 an ounce.
The dollar drifted 0.04 per cent lower to 77.1 US cents.
What’s hot today and what’s not
Hot today: Explorer Hammer Metals (ASX:HMX) more than doubled in value after striking copper and gold near Mount Isa. The company reported the previously undrilled Trafalgar prospect returned promising intercepts from two holes drilled so far. “To intercept a broad zone of significant sulphide mineralisation containing both gold and copper with two wide spaced holes is extremely encouraging,” Managing Director Daniel Thomas said. Speculators agreed. The share price bolted from 3.3 cents to 7.1 cents, a gain of 115.2 per cent.
Not today: Shares in Frontier Digital Ventures (ASX:FDV) slumped after the online classifieds business announced a major investor had sold half its stake. Catcha Group took advantage of last week’s record stock price to sell almost 46 million shares via an off-market block trade. The transaction slashed Catcha’s stake in the company from 26.5 per cent to 13.1 per cent. Frontier’s share price skidded 14.4 per cent.
