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A string of well-received trading updates and gains in defensive sectors helped the ASX shrug off weak leads from Wall Street, rising for the first time in three days.

The S&P/ASX 200 climbed 14 points or 0.2 per cent by mid-session.

Shareholders rewarded positive updates from property giant Goodman, Covid tester Sonic Healthcare and software company Altium. Evolution Mining and Treasury Wine Estates rallied on acquisition news.

Less well-received were updates from Aristocrat Leisure, Mineral Resources and BlueScope Steel.

What’s driving the market

The share market rallied off a two-week low as a decline in long-term interest rates encouraged traders to buy bond proxies. Consumer staples, healthcare and REITs were the morning’s best performers.

Bond markets rebounded overnight, taking some of the heat out of a week-long upward creep in yields. The Australian government ten-year bond yield eased more than five basis points to 1.816 per cent. The decline kept a lid on lenders, but lifted stocks that attract investment flows when yields weaken.

The major banks struggled for a second day in the wake of yesterday’s unexpectedly soft Commonwealth Bank quarterly update. The bank warned profit margins were being squeezed by intense competition among mortgage lenders. CBA shares slid 0.91 per cent, ANZ 1.01 per cent, NAB 0.85 per cent and Westpac 0.76 per cent.

Margin worries were also at the heart of last night’s Wall Street declines. The S&P 500 dipped 0.26 per cent after Target joined Walmart in warning margins were under pressure from supply-chain issues and higher labour costs. Both discount store chains have committed to absorbing costs to retain customers.

“It’s all about market share, market share, market share,” Brian Yarbrough, retail analyst at Edward Jones, said. “And typically when you’re focused on market share that can come at the expense of profitability.”

Going up

Evolution Mining was the morning’s best performer. The share price jumped 8.73 per cent on news the gold miner will buy Glencore’s “world class” Ernest Henry copper-gold mine near Cloncurry for $1 billion. The company will part-fund the acquisition with a private placement in the US.

A bullish full-year outlook lifted property giant Goodman Group 2.33 per cent to a new record. CEO Greg Goodman told today’s AGM a strong start to the year meant the company could forecast growth in operating earnings per security of more than 15 per cent.

A Covid-fuelled earnings bump lifted Sonic Healthcare 3.14 per cent. The medical diagnostics specialist reported revenues rose 5 per cent over the first four months of the financial year. Earnings increased by 16 per cent. The company said its labs continued to test tens of thousands of people around the world every day for the coronavirus.

Confirmation of a strong start to the financial year lifted Altium 3.05 per cent to a pandemic-era high. Chair Samuel Weiss told today’s AGM the company’s software licences, subscription revenues and renewal rates were all growing well.  The company was targeting revenue growth of 16-20 per cent and an underlying earnings margin of 34-36 per cent.

Shareholders welcomed news Treasury Wine Estates will extend its US footprint by acquiring Napa Valley winemaker Frank Family Vineyards for $434 million. The Australian winemaker’s shares rallied 2.49 per cent.

A modest upgrade to the full-year outlook helped raise Medibank 0.86 per cent. The health insurer told investors it was aiming for at least 3 per cent growth in policyholders this financial year, up from previous guidance of “circa 3%”.

Bond proxies kept the market in positive territory as the banks struggled. Woolworths gained 1.47 per cent, CSL 1.25 per cent and Telstra 1.5 per cent. Wesfarmers put on 1.08 per cent, Coles 0.73 per cent and Transurban 0.51 per cent.

Going down

Aristocrat Leisure sank 3.27 per cent despite growing full-year net profit 81 per cent to $865 million and reporting strong momentum into the new fiscal year. Underlying profit declined 40.5 per cent to $820 million from the previous year’s result, which was inflated by a $1 billion tax benefit. The pokie-maker’s shares have more than tripled since the pandemic lows.

Mineral Resources eased 5.35 per cent after warning of trading headwinds. The miner told today’s AGM that iron ore prices had more than halved, discounts widened, and operating and labour costs increased.

BlueScope Steel eased 1.53 per cent after reaffirming first-half guidance.

Other markets

Asian markets followed Wall Street into the red. The Asia Dow shed 0.36 per cent, China’s Shanghai Composite 0.44 per cent, Hong Kong’s Hang Seng 1.12 per cent and Japan’s Nikkei 0.49 per cent.

US futures were tentatively positive. S&P 500 futures rose two points or 0.05 per cent.

Oil dropped below US$80 a barrel for the first time in six weeks. Brent crude sank 35 US cents or 0.44 per cent to US$79.93 a barrel.

Gold added to last night’s five-month high, climbing US$1.90 or 0.1 per cent to US$1,872.10 an ounce.

The dollar continued to lose altitude, easing 0.1 per cent to 72.6 US cents.

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