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The share market began the week little changed as bond yields surged and weak US equity futures suggested Friday’s blowout jobs report may weigh tonight.

The S&P/ASX 200 eased five points or 0.06 per cent to 7011.

Real estate investment trusts and other bond proxies retreated. Resource stocks jumped after BHP launched a takeover offer for copper miner Oz Minerals.

What’s driving the market

Hopes of a slowdown in the pace of US rate hikes were blown away by news that US employment increased last month by twice as much as economists expected. The odds on a 75 basis points increase next month jumped to 66.5 per cent from 34 per cent prior to the report.

Friday’s mixed finish in major US indices was superseded by a retreat in equity futures this morning. S&P 500 futures declined seven points or 0.17 per cent.

Australian bond yields chased gains in their US counterparts as bond traders adjusted their interest rate expectations. The yield on ten-year Australian government bonds climbed 14 basis points to the highest in more than a week.

Strengthening yields sap buying interest in equities that compete with bonds for institutional fund flows. REITs, utilities, consumer staples and healthcare providers all declined.

How the rest of the week plays out is likely to be determined by corporate earnings from a string of big-hitters here and by Wednesday night’s US inflation report.

“The market is expecting the [US] inflation rate to moderate slightly from the scary 9.1% annual change printed last month,” Peter Esho, co-founder of property investment platform Wealthi, said.

“If we see a decline, it will ease market expectations and perhaps start to bring back longer-term bond yields. But if we get a blowout, particularly in the context of strong employment numbers in the US last month, it could start to get ugly with more aggressive rate rises on the cards.”

The domestic reporting season hots up this week with updates from Commonwealth Bank on Wednesday, Telstra, AMP and QBE on Thursday and IAG on Friday.

Going up

Copper miners rallied after BHP launched an $8.3 billion takeover offer for Oz Minerals. Shares in the copper-nickel producer soared 34.36 per cent to $25.42 after BHP offered $25 per share. The OZL board rejected the offer on the basis it significantly undervalued the company and therefore was not in shareholders’ best interests.

BHP shares dipped 0.08 per cent. The miner has already built a stake in its target of less than 5 per cent. CEO Mike Henry said the offer represented compelling value.

“We are disappointed that the Board of OZL has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal,” he said.

Sandfire Resources jumped 7.35 per cent. Copper Mountain gained 34.34 per cent, Golden Deeps 22.73 per cent, 29Metals 15.68 per cent and Dreadnought Resources 8.67 per cent.

Battery metal producers caught a boost from the passage of US President Joe Biden’s US$430 billion climate bill through the Senate. Supporters say the Inflation Reduction Act includes almost US$370 billion of investment in clean energy.

Lithium miners ran again after providing most of last week’s best performers on the index. Lake Resources firmed 8.06 per cent. Core Lithium gained 3.89 per cent.

Rare earths producer Lynas tacked on 4.3 per cent. Nickel miner IGO firmed 3.71 per cent. American Rare Earths surged 22.22 per cent.

Other standouts included PointsBet +7.76 per cent, Block +6.12 per cent and Imugene +5.77 per cent.

A 4.3 per cent jump in Chinese iron ore prices this morning lifted Fortescue Metals 4.36 per cent. Rio Tinto gained 1.7 per cent.

Beach Energy rose 2.02 per cent after signing a deal to supply liquid natural gas to BP Singapore. Supply will commence in the second half of next year.

New contracts worth $100 million helped lift engineering group Monadelphous 1.1 per cent. Contract wins included providing infrastructure for an underground project in Mongolia and a range of services for three separate projects in WA.

Going down

A 34.1 per cent slump in full-year group net profit pulled Suncorp down 5.92 per cent. The insurer said the result was affected by increased natural hazard costs and volatile investment markets. The group reaffirmed its FY23 targets.

Rail haulage operator Aurizon sank 4.7 per cent as a 2 per cent improvement in full-year revenues was outweighed by dips in earnings and profits and a cut to the final dividend. Flooding on the east coast, Covid interruptions and declines in customer needs impacted rail volumes. Underlying earnings declined 1 per cent. Underlying profit fell 2 per cent.

The session’s biggest heavyweight drags among bond proxies were Goodman Group -2.5 per cent, Wesfarmers -1.22 per cent, Transurban -0.89 per cent and Coles -0.84 per cent.

Other markets

A subdued session on Asian markets saw the Asia Dow edge up 0.2 per cent, China’s Shanghai Composite 0.01 per cent and Japan’s Nikkei 0.13 per cent. Hong Kong’s Hang Seng index shed 0.71 per cent.

Oil fell sharply before paring its fall. Brent crude was lately down 22 US cents or 0.2 per cent at US$94.70 a barrel after trading below US$94.

Gold eased US$1.10 or less than 0.1 per cent to US$1,790.10 an ounce.

The dollar bounced 0.36 per cent to 69.28 US cents.

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