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A new week got off to a positive start as investors weighed strong leads from Wall Street and commodity markets against softening US equity futures after China dismissed rumours of changes to national Covid policy.
The S&P/ASX 200 climbed 32 points or 0.47 per cent by mid-session.
Gains in resource and consumer stocks helped offset declines in tech and bank stocks. Westpac and ANZ weighed as the former reported a decline in full-year revenues and the latter traded ex-dividend.
What’s driving the market
Hopes for a super-charged start to the week were undercut by Chinese moves to quash rumours of looser Covid restrictions next year. Social media claims of looming policy changes helped fuel strong gains in Chinese stocks and commodity prices on Friday. Iron ore gained 4.9 per cent, copper 7.1 per cent and Brent crude 4.1 per cent.
US equity futures slumped this morning after Chinese health officials held a press conference to deny any change to the nation’s strict zero-Covid policy. China will stick to its “dynamic clearing” approach, officials from the National Health Commission told a press conference on Saturday.
Health official Hu Xiang said current measures were “completely correct, as well as the most economical and effective.”
Covid cases across the country hit a six-month high on the weekend. Apple announced a temporary reduction in iPhone 14 production because of restrictions at its assembly plant in Zhengzhou.
S&P 500 futures fell 19 points or 0.5 per cent this morning ahead of a week that includes US midterm elections and an inflation report.
Hong Kong and Chinese stocks gave back some of Friday’s sharp gains. The Hang Seng fell 0.75 per cent. The Shanghai Composite dipped 0.34 per cent.
The S&P 500 bounced 1.36 per cent on Friday as US-listed Chinese stocks surged. The rally broke a four-session losing run for the major indices after the Federal Reserve warned interest rates would likely have to go higher than previously projected.
Going up
Gold miners outperformed as the yellow metal held most of Friday’s strong gains. The yellow metal jumped 2.8 per cent on Friday. The metal gave back less than 0.1 per cent or 70 US cents this morning, easing to US$1,675.90 an ounce.
Capricorn Metals jumped 9.86 per cent after upgrading the mineral resource at its Mount Gibson project north-east of Perth. De Grey gained 8.1 per cent, Evolution Mining 6.72 per cent and Gold Road Resources 7.6 per cent. Industry heavyweight Newcrest rose 3.16 per cent.
Other strong performers this morning included Domino’s Pizza +4.1 per cent and AI learning specialist BrainChip +4.88 per cent.
A 4.9 per cent jump in Chinese iron ore prices on Friday lifted the bulk metal majors. BHP rallied 4.3 per cent, Rio Tinto 3.03 per cent and Fortescue Metals 3.65 per cent.
Medibank nudged up 1.6 per cent after declaring it will not pay a ransom to cybercriminals behind the theft of customer data. The health insurer said it had been advised paying a ransom could do more damage than good.
“We believe there is only a limited chance paying a ransom would ensure the return of our customers’ data and prevent it from being published. In fact, paying could have the opposite effect and encourage the criminal to directly extort our customers, and there is a strong chance that paying puts more people in harm’s way by making Australia a bigger target,” CEO David Koczkar said.
Fintech Novatti jumped 48.65 per cent after securing a banking licence from the Australian regulator. The firm will launch the International Bank of Australia (IBOA) after its banking subsidiary obtained a Restricted Authorised Deposit-taking Institution licence from APRA. The bank will partner with fintechs looking for “an innovative and nimble banking partner”, IBOA chief executive Guy Carvalho said.
Arafura popped 13.11 per cent after signing an offtake agreement to supply rare earths to South Korean car-makers Hyundai and Kia. Supply is expected to commence in 2025.
Burns treatment specialist Polynovo was unchanged after announcing its launch in India.
Going down
Westpac retreated 3.94 per cent following a full-year result marred by write-downs and a contraction in margins. Cash earnings declined 1 per cent to $5.276 billion. Net interest margin dropped 17 basis points, despite a rebound in the second half.
The bank increased net profit by 4 per cent to $5.64 billion. Shareholders will receive a fully-franked final dividend of 64 cents per share.
ANZ declined 4.12 per cent as its shares traded without the right to its next dividend.
Coal miner Coronado swooned 6.17 per cent after merger talks with US firm Peabody Energy ended without a deal. Coronado said the termination of discussions would not affect its fourth-quarter outlook.
Suncorp eased 0.68 per cent on news severe weather events across Australia and New Zealand between July and October were expected to generate claims of at least $350-$410 million. The insurer said it had a comprehensive reinsurance program in place.
The launch of a second class action helped drag The Star Entertainment Group down 2.01 per cent. The new claim alleges the casino group made misleading representations about its anti-money laundering systems and compliance. The Star said it intends to defend the proceedings.
Other markets
Asian markets were positive outside China. The Asia Dow advanced 1.41 per cent. Japan’s Nikkei put on 0.84 per cent.
Oil unwound some of Friday’s 4.1 per cent rally. Brent crude fell 97 US cents or 1 per cent to US$97.60 a barrel.
The dollar gave back some of its biggest single-day advance in 11 years. The Aussie reversed 0.14 per cent to 64.29 US cents.
