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A rebound in resource stocks helped the share market weather weak overseas leads ahead of a likely rate rise tomorrow.
The S&P/ASX 200 bounced nine points or 0.12 per cent from Friday’s five-week low.
Gains in the energy and materials sectors helped the market steady following its worst week since mid-June. Declines in growth stocks and banks capped the recovery.
What’s driving the market
The market steadied after falling to a five-week low on Friday as fears of a global recession continued to swirl. Europe’s energy crisis deepened at the end of last week. Covid lockdowns spread in China. Solid jobs figures did little to alter the interest rates outlook in the US.
“A goldilocks [US] payrolls report failed to support risk assets on Friday, with equities and the USD quickly reversing on news that Russia was not restarting gas flows through the Nord Stream pipeline. The S&P500 which was up by 1.3% post payrolls, fell sharply into the red to close down -1.1%.,” NAB’s Director, Economics, Tapas Strickland, said.
Wall Street remains closed tonight for Labor Day, offering investors a temporary reprieve from recent pressure. The S&P 500 has fallen roughly 7 per cent since Federal Reserve Chair Jerome Powell warned of “pain” for businesses as the central bank wages war on inflation.
Back home, the heavily-weighted materials sector was on track to break a week-long losing run following tentative recoveries in iron ore, gold and other metals. The sector bounced 1.3 per cent this morning.
Last week’s falls came as Chinese authorities imposed restrictions in several parts of the country to contain Covid outbreaks. Thirty-three Chinese cities are now under partial or full lockdown, according to Caixin.
Iron ore bounced 3 per cent today on the Dalian Commodity Exchange. On Friday, copper and gold both trimmed losing weeks.
The ASX energy sector climbed 3.25 per cent as oil rallied for a second day. Brent crude climbed US$1.46 or almost 1.6 per cent this morning to US$94.48 a barrel.
The day’s economic data did little to ease pressure on the Reserve Bank to keep hiking rates to slow the economy as a means of controlling inflation. The bank meets tomorrow.
Job adverts increased by 2 per cent last month, signalling strong unmet need for labour. Retail sales increased by 1.3 per cent, as expected.
Company operating profits surged a seasonally-adjusted 7.6 per cent in the June quarter, well ahead of expectations for growth of 4.6 per cent. Wages and salaries increased 3.3 per cent.
Going up
Woodside Energy was the best of the heavyweights, rising 3.16 per cent on expectations of higher gas prices as Russia holds Europe to ransom. Russian state-controlled producer Gazprom failed to restart supply to Europe on Saturday following a maintenance stoppage.
Santos climbed 2.46 per cent. Beach Energy jumped 4.57 per cent.
Coal miners shone after thermal coal prices popped more than 5 per cent last week. Whitehaven surged 7.28 per cent to a fresh record. New Hope gained 5.78 per cent. Coronado firmed 4.5 per cent.
BHP and Rio Tinto rallied with ore prices, adding 2.23 and 1.21 per cent, respectively. Uranium minder Paladin Energy put on 5.1 per cent.
In the lithium space, Core Lithium climbed 5.06 per cent, Liontown Resources 4.17 per cent and Pilbara Minerals 4.23 per cent.
Gold miners also found relief after Friday’s near four-year low. Perseus rebounded 3.5 per cent, West African Resources 3.45 per cent and Evolution Mining 2.55 per cent.
Going down
Dividend payouts and last week’s sharp increase in the cost of long-term borrowing were among the session’s biggest headwinds. Fortescue Metals slumped 5.26 per cent as its shares traded ex-dividend.
Other companies trading without the right to the latest dividend included Bendigo Bank -3.12 per cent, Orora -3.47 per cent, NIB -2.25 per cent and Iluka Resources -1.06 per cent.
Rising yields continued to cloud the outlook for borrowing-dependent growth stocks. Imugene slumped 8.16 per cent, PointsBet 6.44 per cent and Afterpay parent company Block 3.14 per cent.
A rebound in fuel prices weighed on travel stocks. Qantas fell 2.84 per cent. Webjet dipped 2.78 per cent. Flight Centre shed 3.05 per cent. Corporate Travel Management retreated 1.93 per cent as it traded ex-dividend.
Buy now, pay later player Humm dropped 5.77 per cent after abandoning a partnership with Air New Zealand’s loyalty programme. The companies entered an agreement in November 2021, but were unable to settle on commercial terms.
The major high-street banks were among the morning’s heaviest drags. CBA eased 0.88 per cent, ANZ 0.79 per cent, NAB 1.02 per cent and Westpac 0.75 per cent.
Other markets
China’s Shanghai Composite was the pick of the major Asian markets, rising 0.07 per cent. The Asia Dow declined 0.75 per cent, Hong Kong’s Hang Seng 1.24 per cent and Japan’s Nikkei 0.21 per cent.
US futures inched higher over the Labor Day long weekend. S&P 500 futures firmed four points or 0.1 per cent.
Gold eased US$2.40 or 0.15 per cent to US$1,720.20 an ounce.
The dollar hovered below 68 US cents, lately down 0.15 per cent at 67.78 cents.
