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A disappointing quarterly from mining heavyweight BHP crimped a fifth day of share market gains as the ASX 200 edged closer to record territory.

The Australian benchmark climbed to within 0.5 per cent of last year’s peak, rising 31 points or 0.41 per cent by mid-session.

BHP was the biggest drag on the index after Covid-induced labour issues prompted copper and nickel production downgrades. Brambles and Challenger were the morning’s best performers following well-received quarterlies.

What’s driving the market

A week-long rally across the Easter break showed the first signs of losing momentum yesterday as the ASX 200 tested the 7600 resistance level, then faded. The index topped out two points shy of that mark this morning as a 2.2 per cent decline in BHP proved a heavy burden. The miner accounts for more than 10 per cent of the index by weighting since unifying its corporate structure on the ASX earlier this year.  

Quarterly updates this morning highlighted the impact of labour shortages and Covid isolation measures, particularly in the mining sector. BHP maintained its full-year outlook for iron ore and coal production, but cut its guidance for copper and nickel.

“While we expect conditions to improve during the course of the 2023 calendar year, we anticipate the skills shortages and overall labour market tightness in Australia and Chile to continue in the period ahead,” CEO Mike Henry said.

Gold miner Evolution was also forced to cut production guidance, citing wet weather and Covid-related labour issues. The miner reduced its full-year guidance to “around 650,000 ounces” from previous guidance of 670,000 ounces. The share price eased 2.74 per cent.

The market overcame mixed leads from Wall Street. While the blue chips of the Dow rallied 0.71 per cent overnight, the growth stocks of the Nasdaq Composite skidded 1.22 per cent. The broadest of the three major indices, the S&P 500, ended little changed, down 0.06 per cent.

“It continues to be a pretty bifurcated market,” Dave Grecsek, managing director in investment strategy and research at wealth management firm Aspiriant, told CNBC. “Some of the more defensive, value-style companies are enjoying good returns. The flipside is some of those more growth-style tech names are going to be struggling.”

US futures rebounded following a well-received trading update from Elon Musk’s Tesla. S&P 500 futures climbed 21 points or 0.48 per cent. Nasdaq futures rallied almost 0.7 per cent.

Going up

Brambles jumped 7.39 per cent on a sales and profit upgrade. The pallets supplier said sales revenues increased 7 per cent last quarter. The company raised its full-year sales revenue growth guidance to 8-9 per cent from previous guidance of 6-8 per cent. Underlying full-year profit is expected to increase by 6-7 per cent, up from a previous forecast of 3-5 per cent growth.

The prospect of a full-year profit near the upper end of guidance lifted Challenger 8.71 per cent to a pandemic-era high. The investment manager expects normalised net profit before tax to be near the upper end of its $430 – $480 million guidance range. Institutional and retail annuity sales increased by 10 per cent last quarter.

A record quarter boosted Santos 1.15 per cent. The company produced 26 million barrels of oil equivalent for record sales revenues of US$1.9 billion, an increase of 25 per cent from the prior quarter.

Online marketplace Redbubble bounced 2.19 per cent off a 22-month low as increasing revenues helped investors look past a 22 per cent dive in quarterly profit.

Zip Co edged up 0.83 per cent as news of increased volumes and reduced costs helped offset the long wait for profitability. Q2 revenues were $159.2 million, up 39 per cent year on year. The BNPL player said it expects to report its first profit in FY24.

CSL was steady after raising US$4 billion on the US bond market to fund its acquisition of Swiss giant Vifor Pharma.

Going down

Growth stocks struggled in the wake of last night’s Nasdaq slide. Afterpay parent company Block fell 6.82 per cent, Life360 lost 4.91 per cent and Tyro Payments shed 3.9 per cent. Xero gave up 2.9 per cent, Polynovo 2.7 per cent and Telix Pharmaceuticals 2.36 per cent.

Increased spending and evidence of slowing growth helped send Megaport down 17.08 per cent to a 12-month low. The cloud-technology company reported capital expenditure increased to $5.4 million last quarter from $4.1 million in Q2. Average revenue per port declined 2.3 per cent.

A dip in retail sales pulled drinks retailer Endeavour Group down 2.54 per cent. The owner of Dan Murphy’s and BWS saw retail sales fall 3 per cent last quarter, outweighing a 3.8 per cent increase in the hotels business. Sales were impacted by extensive flood damage to stores and hotels on the east coast.

Other markets

A mixed morning on Asian markets saw the Asia Dow drop 0.16 per cent, China’s Shanghai Composite shed 0.6 per cent and Hong Kong’s Hang Seng lose 0.57 per cent. Japan’s Nikkei lifted 1.15 per cent.

Brent crude bounced US$1.12 or 1.05 per cent to US$107.92 a barrel.

Gold eased 20 US cents or 0.01 per cent to US$1,955.40 an ounce.

The dollar dipped 0.04 per cent to 74.41 US cents.

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