Rebounds in oil companies, REITs and banking shares helped the ASX trim a losing week after Wall Street broke a three-session run of falls.
The S&P/ASX 200 bounced 54 points or 0.77 per cent to trim its loss for the week to around 45 points. The Australian benchmark closed at a four-week low yesterday as inflation fears roiled global markets.
Ten of 11 sectors rallied this session as buyers took advantage of the retrace. Afterpay, Brambles and Macquarie Group were the pick of the heavyweights. Commonwealth Bank hit a new record. Declines in CSL, Rio Tinto and Newcrest put a brake on the advance.
What's driving the market
Investors waiting for a dip to put more cash to work lifted the S&P 500 1.22 per cent overnight. The broadest of the major US benchmarks had fallen 4 per cent in three sessions. The Nasdaq Composite bounced 0.72 per cent, reclaiming a fraction of the 8 per cent it lost this month as institutional investors revised their outlooks to reflect expectations for increased borrowing costs.
This week's setback was the latest in a string of market tantrums this year as investors reposition from a low-rate environment bolstered by stimulus spending to a future where strong economic growth and surging commodity prices force governments and central banks to rein in stimulus and raise official rates.
Technology stocks steadied after copping the worst of this week's selling. The sector more than doubled in value during the pandemic, but has been on the slide since peaking February. At yesterday's low the sector had lost almost 27 per cent in three months.
A mixed morning for the sector saw Afterpay gain 1.54 per cent, NextDC 2.17 per cent and Computershare 2.51 per cent. Xero fell 4.68 per cent and WiseTech dipped 1.56 per cent.
"Instead of panicking and joining the tech-sell off queue, investors can contemplate reaping the long-term rewards of the buy-the-dip opportunity in tech shares. The current scenario demands rational decision making on part of investors without letting market oscillations seize their minds and returns," Kalkine Group CEO Kunal Sawhney said.
US futures hinted at further gains tonight. S&P 500 futures rallied 15 points or 0.36 per cent. Nasdaq futures climbed 73 points or 0.56 per cent.
A rebound in revenues helped lift burns specialist Avita Medical 2.14 per cent. Third-quarter revenue more than doubled to $8.8 million from $3.9 million in the corresponding period last year when pandemic lockdowns limited medical procedures unrelated to Covid. The company declared a net loss of $6 million for the quarter.
The financial heavyweights trimmed three days of losses. Macquarie Group put on 2 per cent, ANZ 1.1 per cent, Westpac 1.09 per cent, NAB 0.96 per cent and CBA 0.97 per cent.
The big four miners were mixed following setbacks in bulk metals yesterday. Fortescue rallied 0.38 per cent. Rio Tinto faded 0.22 per cent, BHP 0.06 per cent and Newcrest 0.72 per cent.
"Following a strong rally that sent iron ore to historical highs during the week, the price of the steelmaking ingredient seems to be taking a breather. However, despite the recent retreat, ongoing supply constraints and burgeoning steel demand are pointing towards robust market fundamentals for iron ore," Kalkine's Mr Sawhney said.
"These bullish factors are expected to keep iron ore prices at the upper end of the trading range for the next few months. As the COVID-19 vaccine rollout continues, demand for iron ore is further expected to improve following a potential return of normalcy in more parts of the world."
Oil Search led an advance in the energy sector, rising 2.02 per cent. Santos rallied 1.98 per cent. Woodside put on 1.16 per cent.
REITs bounced as bond yields eased. Vicinity Centres gained 3.34 per cent, Waypoint 2.37 per cent, Cromwell 2.34 per cent and Goodman 2.02 per cent.
Supply-chain logistics company Brambles climbed 0.37 per cent to a three-month high amid growing optimism about this year's recovery in global trade. Other notable moves at the top end of the market included Aristocrat Leisure +1.34 per cent and Woolworths +1.03 per cent.
On the wider market, Whitehaven Coal jumped 8.96 per cent following a broker upgrade. Perenti Global bounced 6.16 per cent and Treasury Wine Estates tacked on 5.09 per cent.
Synlait Milk hit an all-time low following the resignation of Chief Financial Officer Angela Dixon. General Manager Supply Chain Rob Stowell will act as interim CFO. Ms Dixon is the third senior executive to depart the NZ dairy company in two months. Shares fell as low as $2.81 before paring their fall to 0.69 per cent at $2.86.
Mining services provider NRW Holdings hovered near 12-month lows following yesterday's glum outlook from rival Perenti Global. NRW shares fell 1.28 per cent.
Miners filled most of the bottom rungs on the index. Pilbara Minerals declined 3.9 per cent, Nickel Mines 3.1 per cent and Lynas Rare Earths 2.56 per cent.
"Commodity prices were softer overnight, including base metals and iron ore, the former from the general market volatility as an excuse for some retracement from the recent reflation bull run, the latter after the Chinese Premier urged his country to deal with the commodity price surge and its impact. It’ll be interesting to see how the commodity complex trades today and into next week," NAB Director and Senior Economist David de Garis said.
Gold miner Resolute faded 1.71 per cent after confirming former CFO Stuart Gale as Managing Director and CEO. Mr Gale has been acting in the role since the resignation of John Welborn in October.
Asian markets followed Wall Street higher. The Asia Dow advanced 0.91 per cent. China's Shanghai Composite rose 0.43 per cent, Hong Kong's Hang Seng 0.49 per cent and Japan's Nikkei 1.67 per cent.
Oil continued to lose ground following the reopening of a major US fuel pipeline closed by a ransomware attack. Brent crude fell 36 cents or 0.54 per cent to US$66.69 a barrel. Gold eased 80 cents or 0.04 per cent to US$1,823.20 an ounce.
The dollar edged up 0.02 per cent to 77.26 US cents.