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The repairwork from last week’s global “inflation tantrum” continued with a second day of gains as tech stocks inched off seven-month lows and miners mostly shrugged off a setback in iron ore prices.
The S&P/ASX 200 rallied 24 points or 0.34 per cent, supported by a two-session rebound in the US.
A profit upgrade lifted pokie-maker Aristocrat Leisure to an all-time high. The index-moving miners and banks were mixed.
What’s driving the market
Sentiment on global equity markets recovered over the second half of last week as downbeat economic data cooled fears overheating economies would force central banks to curb stimulus spending. The S&P 500 rallied 1.49 per cent on Friday to trim its weekly loss to 1.4 per cent from 4 per cent on Wednesday. The advance followed soft retail sales and consumer sentiment reports.
“Bad consumer news is good news as it forces the Fed to keep the stimulatory punchbowl well liquefied,” NAB Currency Strategist Rodrigo Catril said this morning.
Tech stocks led the US advance, setting up the Australian sector for gains. The Nasdaq Composite surged 2.32 per cent on Friday. Here, Xero rose 4.98 per cent, Altium 1.95 per cent and Appen 0.91 per cent. The rally was capped by a decline of 1.78 per cent in Afterpay.
The market gave up some of its gains as US futures turned lower. S&P 500 futures retreated nine points or 0.21 per cent. The declines came amid lingering concerns about equity valuations as inflation increases.
“Not only are [last] week’s events a warning sign of how uncomfortable inflation prints can become but also a warning sign of how overbought equity markets have become,” Nikolaos Panigirtzoglou, managing director at JPMorgan, told clients.
Chinese shares extended gains after April economic data fell short of expectations. Growth in industrial production and retail sales tapered faster than economists expected. The Shanghai Composite climbed 0.7 per cent.
Going up
Aristocrat Leisure hit fresh highs after upgrading first-half earnings and profit. The company said unaudited statutory net profit was expected to be $346 million as normalised net profit increased 12 per cent relative to the prior corresponding period. Normalised earnings increased 6 per cent as conditions in the US improved. The share price rose as high as $40.86 before easing to $39.05, a gain of 4.58 per cent.
Energy giants Ampol and Viva Energy jumped on news the federal government will inject up to $2 billion to keep the nation’s last two oil refineries open until at least 2027. The government will also contribute up to $125 million for Ampol to upgrade its Lytton facility in Queensland to produce ultra-low sulfur petrol. Viva will get a similar package to improve its refinery in Geelong, Victoria. Ampol shares surged 4.4 per cent to a post-pandemic high. Viva shares climbed 5.28 per cent to their strongest since late 2019.
Crown Resorts improved 0.84 per cent to $13.06 after the board formally rejected an offer of $12.35 per share from US private equity giant Blackstone. The company said the board was still assessing a rival bid from Star Entertainment that values Crown at around $14. Star shares added 1.23 per cent.
Besides Aristocrat, the big movers at the top end were gold miner Newcrest +2.71 per cent and Commonwealth Bank +1.73 per cent. A bright session for gold stocks saw Ramelius rise 6.75 per cent and Resolute add 6.96 per cent. ANZ gained 0.07 per cent and Westpac 0.04 per cent. NAB dropped 0.34 per cent
The big three bulk metal producers traded mixed following Friday’s 10.2 per cent plunge in iron ore spot prices. Fortescue Metals bounced 0.99 per cent. Rio Tinto added 0.26 per cent. BHP retreated 0.38 per cent.
Going down
Half-year profit at fertiliser and explosives firm Incitec Pivot almost halved to $36 million from $65 million amid unplanned manufacturing outages and Covid delays. Pre-tax earnings also fell sharply to $110 million from $159 million in the previous half. The share price slid 6.85 per cent.
“We are well positioned to deliver a stronger second half, with reduced turnaround activity and favourable commodity pricing and conditions in our key agricultural and resources markets,” Managing Director and CEO Jeanne Johns said.
carsales.com dived 10.29 per cent to $17.22 after raising $428 million from institutions at $17. The funds will be used to complete the purchase of US marketplace Trader Interactive. The retail component of the offer opens on Wednesday.
Agribusiness Elders eased 2.74 per cent after declining to offer full-year guidance despite a strong first half. Underlying earnings increased 40 per cent to $73.8 million. Underlying profit rose 41 per cent to $67 million. CEO and Managing Director Mark Allison said the company was well placed to “capitalise on favourable growing conditions and livestock prices”, but costs were expected to increase in the second half.
Macquarie Group retreated 3.63 per cent as it traded without the right to a dividend. The bank will pay out $3.35 per share on July 2.
Nuix skidded 10.66 per cent to an all-time low after Nine Entertainment media raised questions about the data analytics specialist’s governance and accounting practices. The company said its performance and market position were “strong”. Shares that listed at $5.31 and rose as high as $11.85 in January hit $3.06 this morning.
Other markets
A mixed morning on Asian markets saw the Asia Dow decline 0.23 per cent, Japan’s Nikkei dip 0.92 per cent and Hong Kong’s Hang Seng put on 0.24 per cent.
Gold built on its strongest close since February. The yellow metal climbed $11.70 or 0.64 per cent to US$1,849.80 an ounce.
Brent crude rose 19 cents or 0.28 per cent to US$68.90 a barrel.
The dollar faded 0.34 per cent to 77.51 US cents.
