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Banking and tech stocks steered the share market towards its fifth gain in six sessions after a pause in rising energy prices helped Wall Street advance overnight.
The S&P/ASX 200 climbed 30 points or 0.4 per cent to a nine-week high.
Shares in Macquarie Group regained $200 for the first time in more than a month. US payments giant Block traded at its highest since acquiring Afterpay. The market-leading mining and energy stocks took a breather.
What’s driving the market
A week-long global rally resumed overnight as crude prices steadied and lenders rose on the prospect of higher rates. The Dow climbed 0.74 per cent to its fifth gain in six nights. The S&P 500 put on 1.13 per cent. The pan-European Stoxx 600 added 0.85 per cent.
“US stocks managed to win back some lost ground last night, inching higher as investors shrugged off concerns that high inflation will push the domestic economy into recession. Investors digested hawkish remarks from the Fed’s Chair and continued to monitor developments in the Russia-Ukraine war,” Kalkine Group CEO Kunal Sawhney said.
Growth stocks outperformed on both sides of the Pacific after JPMorgan Chase said the time was right to target areas that “overshot on the downside” during this year’s correction. These included “innovation, tech, biotech” and small caps.
The tech-heavy Nasdaq Composite jumped 1.95 per cent. Here, I.T. was the pick of the sectors, rising 3.1 per cent to a six-week high. The sector lost more than a third of its market value between November and this month as investors dumped companies whose valuations seemed most at risk from higher rates.
The buy now pay later sub-sector came in for particularly heavy treatment amid questions over profitability and debts. This morning Block, the US acquirer of Afterpay, rallied 7.4 per cent to its highest since the takeover two months ago. Zip Co gained 6.54 per cent, Sezzle 5.69 per cent and Tyro Payments 6.56 per cent.
While the morning’s strongest gains came from tech and fintech, much of the muscle behind the move came from the heavily-weighted finance sector.
Lenders have been on the rise this month in anticipation of margin expansion as rates increase. The yield on ten-year Australian government bonds came within a hair’s breadth this morning of cracking 2.8 per cent for the first time since mid-2018.
Macquarie Group climbed 1.83 per cent to $201.15. NAB put on 0.96 per cent, CBA 0.95 per cent, ANZ 0.89 per cent and Westpac 0.19 per cent.
Going up
Dip-buyers targeted some of the year’s worst performers. Imugene gained 9.62 per cent, Polynovo 7.69 per cent and PointsBet 7.2 per cent.
At the heavyweight end, property giant Goodman added 1.21 per cent, CSL 0.81 per cent and Coles 0.14 per cent.
An upbeat outlook and dividend increase helped shares in KMD Brands, owner of adventure sports brands Rip Curl and Kathmandu, overcome a $5.5 million half-year loss. The retailer said underlying earnings rebounded after lockdowns. The group will pay an interim dividend of three cents per share, an increase of 50 per cent. The share price firmed 0.41 per cent
A broker upgrade lifted Sonic Healthcare 1.67 per cent. Credit Suisse raised its price target to $40 per share and upgraded its recommendation to ‘Outperform’.
Explorer Carnarvon Energy jumped 14.06 per cent after striking oil off the coast of WA. Wireline data confirmed 46 metres of net oil pay in the Pavo-1 exploration well. Carnarvon has a 30 per cent interest in the well. Partner Santos inched up 0.26 per cent.
Going down
A margin warning dragged the ASX’s third-largest listed healthcare company down 6.56 per cent. New Zealand respiratory specialist Fisher & Paykel Healthcare said rising freight costs will knock around 250 basis points off its gross margin target. Full-year revenues were expected to be in the range of NZ$1.675 – NZ$1.7 billion.
Online luxury goods retailer Cettire slumped 10 per cent on news founder and CEO Dean Mintz sold 35 million shares or around 9.2 per cent of the company’s total capital. Mintz, the company’s largest shareholder, retained a 56.7 per cent holding and indicated he will not sell any more shares ahead of full-year results.
A mild overnight retreat in crude oil kept a lid on energy producers. Beach Energy dipped 0.62 per cent. Woodside was flat.
The iron giants declined for the first time in five sessions. BHP retreated 1.31 per cent, Rio Tinto 0.39 per cent and Fortescue Metals 0.03 per cent.
Other markets
Japan’s Nikkei led a strong morning on Asian markets, rising 2.52 per cent. The Asia Dow gained 1.64 per cent, China’s Shanghai Composite 0.04 per cent and Hong Kong’s Hang Seng 0.73 per cent.
US futures marked time. S&P 500 futures were recently off a quarter of a percentage point or 0.01 per cent.
Brent crude overcame early weakness to edge up seven US cents or less than 0.1 per cent to US$115.55 a barrel.
Gold drifted down US$2.60 or 0.14 per cent to US$1,918.90 an ounce.
The dollar eased 0.12 per cent to 74.53 US cents.
