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A record-setting week for the ASX continued with a new high as gains in tech and defensive sectors outweighed declines in Commonwealth Bank and the major iron ore producers.

The S&P/ASX 200 was ahead 31 points or 0.4 per cent mid-session at 7619. Today’s peak of 7631.1 was the index’s fourth all-time high this week.

Records fell for Wesfarmers, Sonic Healthcare and Macquarie Group. The healthcare sector rose for the first time in four sessions. BHP, Rio Tinto and CBA were among the biggest drags.

What’s driving the market

At the end of a week when records became commonplace, investors turned to defensive stocks in a sign at least some market participants were taking out insurance against a downturn. The ASX 200 has put on 420 points or almost six per cent in four weeks since the “Sydney lockdown low” on July 19

Healthcare and utilities were the pick of the sectors, with support from I.T. and consumer stocks during a lull in the full-year reporting season. This month’s steady deterioration in iron ore prices weighed on the big three producers.

Healthcare had been largely overlooked this week as investors favoured sectors with better exposure to the economic cycle. Today’s rally reversed three days of declines. Sector giant CSL climbed 2.46 per cent, Sonic Healthcare 1.29 per cent and Fisher & Paykel Healthcare 3.08 per cent.

The market has risen steadily through the first major week of earnings season, supported by a rash of share buybacks.

“The earnings season has so far continued to meet the share market’s lofty expectations with several companies rewarding shareholders with share buybacks as well as dividend hikes,” Kalkine Group CEO Kunal Sawhney said. 

“A remarkable feature of the ongoing earnings season has been a rush of share buybacks announced by blue-chip companies, like Telstra, Suncorp, and Commonwealth Bank. The remarkable earnings growth and broader clarity on the growth trajectory of the Australian economy appear to have made firms more comfortable with spending excess cash via buybacks.  

“The market is now waiting for an action-packed week ahead when more than 50 companies will report their earnings results. Some of the big names are slated to release their earnings next week, including Newcrest Mining, Treasury Wine Estates, CSL, Coles, Woodside Petroleum and Beach Energy.”

Fresh highs for the S&P 500 and Dow provided the local market with a solid platform. The S&P 500 climbed 0.35 per cent overnight. The Dow edged up 0.04 per cent and the Nasdaq 0.35 per cent amid a gentle rotation from cyclical sectors into growth stocks.

Going up

The utilities sector was lifted by a 4.6 per cent rebound in AGL Energy following yesterday’s bleak full-year forecast. The energy giant predicted a further decline in earnings this financial year as the rise of renewables crimps profit opportunities. APA Group gained 0.51 per cent, AusNet 0.52 per cent and Spark Infrastructure 0.37 per cent.

Other defensive heavyweights to rise included Goodman Group +1.1 per cent, Charter Hall Group +2.91 per cent and Coles +0.71 per cent

An overnight rise in the greenback lifted companies with significant US earnings. Aristocrat Leisure firmed 1.41 per cent, Brambles 0.68 per cent and Macquarie Group 0.72 per cent.

The rest of the financial heavyweights were mixed. Westpac rose 1.55 per cent, NAB 1.28 per cent and ANZ 0.37 per cent. CBA succumbed to a second day of profit-taking since Wednesday’s full-year report, falling 1.88 per cent.

Kathmandu advanced 0.76 per cent on news Brooke Farris will take over as CEO of Rip Curl. Ms Farris will replace Michael Daly, who moves up to Group CEO and Managing Director of Kathmandu Holdings.

The morning’s best performers were Premier Investments +5.16 per cent, Star Entertainment +5.07 per cent, AGL +4.6 per cent and Westgold +3.57 per cent.

Going down

The big three ore producers largely weathered an initial decline in ore, but have slowly succumbed as prices test four-month lows. The spot price for ore landed at Tianjin fell 2.9 per cent yesterday after China announced fresh curbs on steel production to reduce emissions ahead of the Winter Olympics.

BHP retreated 0.83 per cent, Rio Tinto 0.52 per cent and Fortescue Metals 1.02 per cent. In the wider mining space, Orocobre dropped 5.22 per cent, Chalice Mining 2.67 per cent and Whitehaven Coal 1.69 per cent.

Suncorp fell 3.68 per cent and Scentre Group 2.29 per cent as they went ex-dividend.  

Telstra touched its strongest level in four years before rolling over to a loss of 0.38 per cent. CEO Andy Penn yesterday heralded the telco had reached a turning point. Buyers were encouraged by a $1.35 billion share buyback and the promise of solid growth.

Baby Bunting dropped 3.85 per cent after declining to offer earnings guidance as pandemic lockdowns clouded the outlook. The baby goods retailer increased its full-year statutory net profit 76 per cent to $17.5 million and increased sales 15.6 per cent.

The company said: “The COVID-19 pandemic continues to create significant disruption, with the risk that trading conditions will fluctuate greatly throughout the year. Accordingly, no guidance about FY22 earnings can be given at this time.”

Other markets

A subdued morning on Asian markets saw the Asia Dow ahead 0.18 per cent, China’s Shanghai Composite up 0.29 per cent, Hong Kong’s Hang Seng off 0.17 per cent and Japan’s Nikkei ahead 0.12 per cent.

US futures were flat. S&P 500 futures dipped a point or 0.02 per cent.

Oil added to overnight losses. Brent crude retreated 48 US cents or 0.67 per cent to US$70.85 a barrel.

Gold rallied US$4.50 or 0.25 per cent to US$1,756.20 an ounce.

The dollar was broadly steady at 73.43 US cents.

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