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The share market hit a four-session high before turning negative as US futures signalled potential weakness tonight.

The S&P/ASX 200 reached mid-session a point or 0.01 per cent lower after earlier gaining 47 points.  The early rally brought the benchmark briefly within ten points of its highest close since early January.

Newcrest, Commonwealth Bank and NAB were the pick of the index heavyweights. Tech and consumer stocks were among the biggest weights.

What’s driving the market

The ASX struggled to built on Friday’s end-of-week reversal as the ripples from last week’s central bank policy updates continued to weigh. Shares rose in early action amid tentative optimism the weekend and the launch of a new US quarterly reporting season might act as circuit-breakers after last week’s choppy run.

That optimism faded as the morning wore on. US futures soured after Chinese inflation data missed expectations. S&P 500 futures slumped 27 points or 0.6 per cent ahead of a week expected to be dominated by the reaction to tomorrow night’s inflation data and earnings from the major banks.

Wall Street’s main indices finished mixed on Friday as investors rotated from potential losers from higher rates into potential winners. The blue chips of the Dow climbed 0.4 per cent as banks and health stocks outperformed. The Nasdaq skidded 1.34 per cent and the S&P 500 0.27 per cent.

Back home, Thursday’s March employment report looms as the most important data-point of a holiday-shortened week.

“We expect the unemployment rate to fall one-tenth to 3.9% on the back of a 50k employment gain,” NAB’s Head of FX Strategy Ray Attrill said. “Also on the local agenda for the week is the Westpac-Melbourne Institute Consumer Confidence survey on Wednesday, with focus on whether it rebounds following the sharp 4.2% fall in the March. The NAB Business Survey for March is also released on Tuesday.”

Going up

The big four Australian high-street banks marched higher on the expectation they will enjoy stronger margins as interest rates reset towards neutral this year. The Australian ten-year bond yield climbed above 3 per cent this morning for the first time since 2015.

CBA rallied 1.14 per cent, NAB 1.14 per cent, ANZ 1.02 per cent and Westpac 0.54 per cent.

Lenders welcome higher rates for the opportunity to expand margins. Conversely, companies perceived to rely most on borrowing were among the morning’s biggest losers.

Nickel miner Western Areas jumped 5.21 per cent to $3.84 after suitor IGO Ltd increased its offer. IGO raised its takeover proposal to $3.87 per share from $3.36 to reflect higher nickel prices. IGO shares rallied 3.14 per cent after the Western Areas board backed the revised bid.  

BlueScope Steel announced it will triple its metal coating and painting capacity in the US by acquiring the country’s second-largest metal painter for US$500 million. The acquisition of Coil Coatings will expand the company’s footprint on the eastern coast. The share price rallied 0.98 per cent.

An offtake agreement with Ford lifted lithium miner Lake Resources 13.98 per cent. The companies signed a non-binding memorandum of understanding for Lake to supply the car-maker with 25,000 tonnes of lithium per annum.  

Worley climbed 1.6 per cent to a two-year high on news the engineering group will appeal against a judgement emerging from a class action lodged in 2015. The company’s insurers will largely fund the action.

Telix Pharmaceuticals firmed 2.95 per cent after licensing the worldwide rights to commercialise radiolabelled forms of Eli Lilly’s olaratumab antibody for treating cancer.

Junior biotech ResApp jumped 25 per on a takeover offer from Pfizer. The US multinational offered 11.5 cents per share, valuing the Australian digital health company at $100 million. The ResApp board unanimously recommended shareholders accept the offer, pitched at a 27.8 per cent premium to Friday’s closing price.

Going down

The tech sector fell 0.9 per cent towards its fourth straight decline since the RBA signalled it was preparing to raise rates. Appen gave up 2.67 per cent, Novonix 2.65 per cent and Megaport 2.48 per cent.

Other rate-sensitive growth stocks to weaken included Polynovo -4.52 per cent, Tyro Payments -3.54 per cent and PointsBet -3.08 per cent.

Uranium miners pared two days of strong gains that followed the announcement of a UK plan to expand its nuclear energy program. Paladin Energy sagged 3.87 per cent, Toro Energy 13.79 per cent and Alligator Energy 10 per cent.

At the heavyweight end of the market, Fortescue Metals fell 2.89 per cent, Wesfarmers 1.16 per cent and Macquarie Group 0.91 per cent.

Other markets

Asian markets retreated after Chinese inflation data showed an acceleration in consumer prices. The Asia Dow fell 0.95 per cent, China’s Shanghai Composite 2.04 per cent, Hong Kong’s Hang Seng 2.82 per cent and Japan’s Nikkei 0.74 per cent.

Oil turned firmly lower with US futures. Brent crude dropped US$2.35 or 2.3 per cent to US$100.43 a barrel.

Gold eased 60 US cents or 0.03 per cent to US$1,945 an ounce.

The dollar faded 0.3 per cent to 74.23 US cents.

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