Join our daily newsletter At The Bell to receive exclusive market insights
Tech stocks spearheaded a second day of gains and silver mania subsided as repair-work continued on the ASX.
The S&P/ASX 200 climbed 87 points or 1.3 per cent by mid-session. The rally followed a strong rebound on Wall Street as volatility eased on financial markets after a week of ructions.
Technology, industrial and energy stocks led the advance, with support from the big banks and miners. A speculative Reddit-inspired rush into silver stocks stuttered as precious metals declined.
What’s driving the market
US stocks rebounded overnight as investors appeared to become more comfortable with the speculative retail mania that caused last week’s severe price dislocations. The S&P 500 jumped 1.61 per cent. Strong gains in tech stocks ahead of earnings updates lifted the Nasdaq Composite 2.55 per cent.
“The equity market cognoscenti outside of the Reddit-obsessed retail community appear to have decided over the weekend that the collective actions of the latter in attacking publicly known large short positions held by hedge funds, including whatever they do next (silver was the story either side of the weekend) doesn’t pose a systemic risk capable of being the dominant influence on the broader market on a significant or sustained basis,” NAB Director and Senior Economist David de Garis said.
US futures improved as the Asian session advanced. S&P 500 futures climbed 15 points or 0.4 per cent. Nasdaq futures added 77 points or 0.6 per cent.
A retail short squeeze on silver stalled this morning. Silver dropped 57 cents or 1.9 per cent to US$28.85 an ounce after trading above US$30 overnight. That triggered sharp declines on local silver miners that surged yesterday. Silver Mines, Thomson Resources, Mithril Resources and Investigator Resources all shed at least 20 per cent. Industry heavyweight South32 climbed 4.2 per cent.
The Reserve Bank met this morning, but was not expected to cause any waves when it updated policy at 2.30 pm AEDT. The cash rate was expected to remain at a record low.
Going up
The high-flying tech sector took its cues from the US, rising 3.8 per cent. Nearmap jumped 5.7 per cent and Afterpay 7 per cent. Bravura Solutions added 4 per cent and Appen 3.9 per cent.
The big three iron ore producers extended yesterday’s rebounds from multi-week lows despite down-pressure on ore. Rio Tinto climbed 2.9 per cent, BHP 2 per cent and Fortescue metals 1.6 per cent.
Industrial heavyweights Transurban and Brambles put on 2.8 and 2.3 per cent, respectively. Gains for the big four banks ranged from 1.1 per cent for Westpac to 2.4 per cent for CBA. NAB added 1.7 per cent and ANZ 1.2 per cent.
A 10 per cent increase in half-year net profit after tax lifted shares in lender and debt collector Credit Corp 6.6 per cent. The company said it saw a strong recovery in consumer lending over the December quarter.
Travel agent Webjet jumped 6.6 per cent following a broker upgrade. Rival Flight Centre rallied 5.3 per cent.
Going down
Defensive stocks were out of favour as optimism returned to the market. CSL fell 2 per cent and Woolworths 0.4 per cent.
Gold stocks declined as the yellow metal wobbled before recovering. Newcrest dropped 0.6 per cent, Ramelius Resources 2.9 per cent and Saracen Mineral 1.8 per cent.
Heavy falls at the speculative end included a swag of yesterday’s winners from the Reddit silver squeeze. Investigator Resources sank 20 per cent, Silver Mines 20.6 per cent, Mithril Resources 20 per cent, Thomson Resources 22 2 per cent and Equus Mining 18.2 per cent.
Winners from recent interest in the index’s most shorted stocks also declined. Unibail-Rodamco-Westfield shed 5.6 per cent, Blackmores 4 per cent and A2M Milk 3.7 per cent.
Online furniture retailer Temple & Webster slumped 2.5 per cent to a two-and-a-half-month low despite announcing a 118 per cent year-on-year jump in half-year revenue to $161.6 million. The company said it had made a strong start to the year, with January revenue double last year’s figure.
Other markets
A positive morning on Asian markets saw China’s Shanghai Composite gain 0.16 per cent, Hong Kong’s Hang Seng 1.43 per cent and Japan’s Nikkei 0.71 per cent.
Gold dipped 80 cents or less than 0.1 per cent to $US1,863.10 an ounce. Brent crude improved 51 cents or 0.9 per cent to $US56.86 a barrel.
The dollar rose 0.18 per cent to 76.47 US cents.
What’s hot today and what’s not
Hot today: The arrival of tech entrepreneur Bevan Slattery on the registry of Rent.com.au (ASX:RNT) lit a fire under the share price. Shares in the property listings company surged 167.4 per cent on news Slattery’s investment vehicle had taken a $2 million stake at a premium to the last traded share price. Slattery has built a reputation for founding and investing in some of the nation’s most successful tech ventures, including NextDC, Superloop and Megaport. He said, ” “I love disruptive platforms that have the ability to scale and Rent.com.au has great potential to achieve that goal.”
Not today: A 40 per cent slump in the price of salmon forced Huon Aquaculture (ASX:HUO) to walk back expectations for this month’s half-year trading update. The fish farmer warned it expects this year’s operating earnings to be “substantially lower” than FY2020’s $47.3 million. Trade tensions with China were another headwind. The share price slumped 10.8 per cent.
