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The share market recovery of 2023 got back on track as a first rise in three sessions lifted the S&P/ASX 200 to a fresh nine-month high.
The Australian benchmark rose to within 1.3 per cent of its 2021 record before trimming its climb to 34 points or 0.45 per cent.
Gold miners and energy producers were the only significant laggards as a broad rally lifted the wider market. Flight Centre and battery metal miners were among the morning’s strongest performers.
What’s driving the market
A new month continued the January uptrend after a positive session on Wall Street soothed any jitters ahead of interest rate decisions in the next 48 hours in the US, Europe and UK. Wall Street wrapped up its best January in four years with further gains as a slowdown in wage growth added to evidence that inflationary pressures are easing.
“Wall Street got a boost after a report showed employment compensation growth slowed towards the end of 2022. Although it is not welcome news for U.S. citizens struggling to keep up with high inflation, markets took it positively, as it bodes well for Fed’s rate decision tonight,” Kunal Sawhney, chief executive at research group Kalkine, said.
“Given the drop in inflation over the last few months, Wall Street expects the Fed to announce a 25 bps rate increase tonight.”
The S&P 500 rallied 1.46 per cent. The advance extended the US benchmark’s tally for the month to 6.2 per cent, mirroring gains here for the ASX 200. The broader All Ordinaries fared even better, climbing 6.4 per cent during its best start to a year since 1986.
The scale of the January advance has stoked hopes for a strong year after the wipeout of 2022. The five times when the S&P 500 has risen more than 5 per cent during the January after a losing year have been followed by annual gains of between 20.1 and 45 per cent, according to Ryan Detrick at Carson Group.
“We’re seeing all of these historical major drivers of the market starting to all point in a direction that we think would be supportive of equity market gains over the next few months,” Greg Bassuk, CEO of AXS Investments, told CNBC.
Back home, investors were encouraged by confirmation the Reserve Bank thinks inflation peaked at the end of last year.
“We think the peak in inflation was at the end of 2022 – at around 8 per cent – and that inflation will begin to ease over the course of this year,” the bank’s head of economic analysis, Marion Kohler, told a Senate Committee on the Cost of Living this morning.
Going up
Flight Centre soared 7.64 per cent to $17.04 after raising $180 million from institutional investors to fund the acquisition of a UK luxury travel business. The “strongly supported” placement was completed at $14.60 per new share.
Imugene bounced 5.56 per cent off yesterday’s four-week low. Copper and gold miner Sandfire rallied 5.28 per cent.
Battery metal miners filled most of the other slots at the top of the index following a rebound in US peers overnight. Nickel Industries advanced 4.34 per cent after yesterday’s upbeat quarterly. Lynas Rare Earths put on 4.05 per cent, Allkem 2.31 per cent and Sayona Mining 2.88 per cent.
Atlas Arteria firmed 0.73 per cent after the French government signed off on a plan to fund upgrades to the operator’s motorways through higher tolls.
Silver miner Lode Resources more than doubled in value after reporting “exceptionally rich” drill intercepts from its Webbs Consol Silver Project in NSW. Managing Director Ted Leschke said the latest intercepts increased the potential for the overall prospectivity and scale of the project. The share price bolted from 12.5 cents to 28.5 cents, a gain of 137.5 per cent.
Credit Corp firmed 1.16 per cent on the promise of a better second half after loss provisioning and increased US costs helped knock first-half net profit down 30 per cent. The share price reversed an early loss as the company insisted earnings were expected to “recover strongly” in the second half. The company said its full-year profit guidance was “intact”.
The Reject Shop added 1.22 per cent as a 3.5 per cent increase in first-half sales from the prior corresponding period helped offset the unexpected resignation of CEO Phil Bishop. First-half earnings were expected to improve from $20.5 million in H122 to $22.5-$23.5 million. Bishop resigned after just six months for “personal reasons”.
A 4.3 per cent increase in net sales last quarter, year-on-year, helped lift thinly-traded gourmet food business Maggie Beer 2.33 per cent. Net profit from continuing operations for the first half was 10.2 per cent stronger than H122 at $7.2 million.
Going down
Commonwealth Bank hit an all-time high at $110.81 before easing to a loss of 0.13 per cent at $109.92. The bank has rallied almost 8 per cent this year, outpacing its rivals.
Gold miners trailled as the yellow metal pared its first rise in four sessions. Gold for April delivery eased US$2.10 this morning after settling US$6.10 or 0.3 per cent ahead overnight at US$1,945.30 an ounce.
Gold Road Resources lost 1.98 per cent, Perseus 0.7 per cent and Silver Lake Resources 1.92 per cent.
Energy producers were also weak. Woodside Energy dropped 0.97 per cent. Santos gave up 0.77 per cent.
Agribusiness Nufarm faded 0.68 per cent despite reaffirming revenue guidance at today’s AGM. CEO and Managing Director Greg Hunt said positive momentum had continued into the first quarter of FY23.
Other markets
Asian markets advanced. The Asia Dow put on 0.58 per cent, Hong Kong’s Hang Seng 0.36 per cent, Japan’s Nikkei 0.5 per cent and China’s Shanghai Composite 0.16 per cent.
US futures retreated ahead of tonight’s interest rate decision. S&P 500 futures dropped 11 points or 0.28 per cent.
Oil added to last night’s 1.1 per cent advance. Brent crude lifted 31 US cents or 0.36 per cent to US$85.77 a barrel.
The dollar edged up 0.05 per cent to 70.54 US cents.
