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Strong overseas leads and takeover action in the healthcare sector helped the ASX weather a triple-digit jump in Covid cases in New South Wales.

The S&P/ASX 200 reached mid-session 54 points or 0.75 per cent ahead. Gains in mining, property and bank stocks outweighed mild down-pressure on select defensive sectors.

The market retained most of its gains following mid-morning news NSW recorded 112 new local coronavirus cases. Investors were prepared for the worst after Premier Gladys Berejiklian warned yesterday that health authorities expected a triple-digit tally today.

What’s driving the market

Takeover interest and record US closes helped cushion the market from the Covid data. The owner of the Priceline and Soul Pattinson pharmacy chains, Australian Pharmaceutical Industries (API), surged 19.43 per cent on interest from Wesfarmers. The retail and industrial conglomerate made a non-binding, indicative cash offer of $1.38 per share, valuing API at around $680 million.

The offer price represented a 21 per cent premium to Friday’s close. The bid has the support of major API shareholder, Washington H. Soul Pattinson.  

“If the Proposal is successful, API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector,” Wesfarmers Managing Director Rob Scott said.

“The combination of Wesfarmers and API is a compelling opportunity to capitalise on API’s strengths and positioning in these markets while drawing upon Wesfarmers’ capabilities in retail and distribution.”

Wesfarmers inched up 0.17 per cent. Washington Soul Patts eased 1.19 per cent.

Elsewhere in the healthcare sector, Healius announced it had acquired unlisted Queensland imaging business Axis Diagnostics. Healius shares crept up 0.22 per cent. Telco Swoop rose 8.33 per cent after acquiring South Australian broadband provider Beam Internet for an enterprise value of $7.2 million.

US stocks finished a choppy week at record highs as economic growth fears abated. The S&P 500 climbed 1.13 per cent. The Dow gained 1.3 per cent.

“We got new record highs for US stocks, higher US bond yields with curve re-steepening, a softer USD… and, with the exception of a slight fall in iron ore futures, stronger commodity prices across the board,” NAB Head of FX Strategy Ray Attrill said.

The odds on the Greater Sydney lockdown lifting this weekend continued to dim after the state recorded the highest number of new cases of the current outbreak. Ms Berejiklian urged Sydneysiders to stay home.

“The virus won’t spread if people don’t leave home. That is the bottom line. Don’t leave home unless you absolutely have to,” she said.

Going up

The materials sector climbed 2.19 per cent to its strongest level in two months after Chinese moves to stimulate growth lifted commodity prices. The People’s Bank of China loosened lending requirements for financial institutions on Friday.

BHP jumped 3.16 per cent, Rio Tinto 1.86 per cent and Fortescue Metals 2.47 per cent. Further down the food-chain, Viva Energy gained 3.62 per cent, Orocobre 3.48 per cent and Mineral Resources 3.08 per cent.

Mining contractor NRW Holdings rose 8.25 per cent to a five-week high after announcing the sale of mining assets to Boggabri Coal Operations. The sale will bring in around $81 million. Most of the payment will be used to pay down debt.

Bank stocks trimmed gains as bond yields pared an early advance. CBA cut its rise to 0.53 per cent, ANZ 0.72 per cent, NAB 0.73 per cent and Westpac 0.63 per cent. Macquarie Group held onto a gain of 0.98 per cent.

Goodman Group climbed 1.73 per cent to a post-GFC peak. The property giant last traded at this level in January 2008. Elsewhere in the property space, Charter Hall Group added 2.56 per cent, Waypoint REIT 1.92 per cent and Charter Hall Retail 1.9 per cent.

Early strength in the greenback helped US-facing businesses. Aristocrat Leisure climbed 0.7 per cent, CSL 1.16 per cent and Afterpay 0.56 per cent.

Going down

An uptick in bond yields dulled interest in growth stocks. WiseTech dipped 1.34 per cent, Megaport 1.23 per cent and Altium 1.03 per cent.

Bond proxies mostly retreated as traders favoured sectors with better exposure to the global economic recovery. Brambles retreated 0.79 per cent, Coles 0.77 per cent, Telstra 0.53 per cent and Woolworths 0.18 per cent.

Other markets

A positive morning across Asian markets saw the Asia Dow rise 1.34 per cent, China’s Shanghai Composite 1.12 per cent, Hong Kong’s Hang Seng 0.82 per cent and Japan’s Nikkei 2.22 per cent.

US futures faded as the morning wore on. S&P 500 futures were recently off almost four points or 0.08 per cent despite a positive start.

Brent crude eased three cents or 0.04 per cent to US$75.52 a barrel. Gold slid US$3.60 or 0.2 per cent to US$1,807 an ounce.

The dollar declined 0.15 per cent to 74.78 US cents.

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