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Aussie shares drifted further from 14-month highs as gains in iron ore producers were outweighed by declines in US-facing businesses as the greenback retreated.
The S&P/ASX 200 faded 29 points or 0.41 per cent by mid-session. The index fell as low as 7005.9 before bouncing to 7017.
What’s driving the market
Record iron ore prices proved a flimsy defence against a second day of weakness as investors await clarity on whether this week’s US quarterlies justify record prices. Fortescue Metals was the best of the heavyweights, rising 1.01 per cent to a seven-week high. BHP edged up 0.63 per cent. Rio Tinto added 0.21 per cent.
Iron ore prices surged above US$190 a tonne yesterday as soaring steel prices and reported production clampdowns in parts of China supported prices. The spot price for ore landed in Tianjin climbed $6.35 or 3.4 per cent to US$191.45 a tonne. Copper climbed to its highest level since August 2011.
A rising dollar presented a headwind for other exporters. The Aussie climbed back above 78 US cents overnight and was lately off 0.14 per cent at 77.82 US cents.
“Surging commodity prices boosted the AUD, while the USD was mixed,” ANZ analysts said. “Copper climbed to its highest in almost a decade as stimulus measures across the globe boost demand for the key industrial metals,” they added.
A weakening US dollar pressured companies with significant US earnings. Afterpay slumped 3.67 per cent, Transurban 1.7 per cent and CSL 1.18 per cent.
Wall Street was mixed but broadly higher overnight ahead of a slew of earnings and economic data this week. The S&P 500 and Nasdaq Composite closed at all-time highs. The Dow eased 0.18 per cent.
US futures held steady this morning despite an after-hours slump in Tesla, the first of the ‘Big Six’ due to report this week. Tesla shares dropped 2.49 per cent after narrowly missing revenue expectations. S&P 500 futures inched up a point or 0.03 per cent.
Going up
A busy morning in the waste management industry saw Bingo Industries accept a $2.3 billion takeover offer as rival Cleanaway moved closer to acquiring French giant Suez Groupe’s Sydney assets.
Bingo shares jumped 6.25 per cent to $3.40 after the company entered into a scheme of implementation for Macquarie Infrastructure and Real Assets and managed funds to acquire all of the shares in Bingo at $3.45. Cleanaway was flat after announcing a deal to buy all of Suez’s Australian assets had been terminated but the company intended to proceed with a binding agreement to acquire the French group’s Sydney landfill sites and waste stations for $501 million.
Tabcorp jumped 3.33 per cent after UK gaming gambling giant Entain sweetened its bid for the Australian group’s Wagering & Media business. Entain upped its unsolicited non-binding and indicative offer from around $3 billion to $3.5 billion. Tabcorp said its board had not formed a view on the revised proposal.
A profit upgrade lifted Bluescope to its highest level since the Great Financial Crisis. The steelmaker raised its half-year underlying earnings forecast to $1 billion – $1.08 billion from previous guidance of $750 – $830 million. The upgrade came as steel prices surged in the US and Asia. The share price hit $23.99, a level last seen in 2008, before easing to $22.37, a gain of 1.45 per cent.
“The business has gone from strength to strength, benefitting from strong spreads, prices and demand,” Managing Director and CEO Mark Vassella said.
South32 rose 0.87 per cent on quarterly production records in Brazilian alumina and Australian manganese. The diversified miner also lifted metallurgical coal production in the Illawarra by 17 per cent and raised its full-year production guidance at the Cannington silver and lead mine in Queensland by 10 per cent.
Energy companies were lifted by a rebound in oil this morning. Brent crude bounced 23 cents or 0.35 per cent to US$65.26 a barrel. Woodside Petroleum rallied 0.31 per cent and Santos 0.36 per cent.
Going down
The domestic tech sector snubbed the Nasdaq’s market-leading overnight role, falling 1.41 per cent. Appen fell 3.24 per cent, Xero 2.61 per cent and Nanosonics 1.14 per cent.
Troubled pharmaceutical firm Mesoblast sank 7.23 per cent to a 12-month low. The company was reportedly facing a potential class action over market disclosures.
Westpac was worst of the big four banks, falling 0.54 per cent. NAB shed 0.45 per cent and CBA 0.42 per cent. ANZ rallied 0.45 per cent.
Other markets
A downbeat session on Asian markets saw the Asia Dow decline 0.56 per cent, China’s Shanghai Composite 0.54 per cent, Hong Kong’s Hang Seng 0.09 per cent and Japan’s Nikkei 0.19 per cent.
Gold reversed yesterday’s gains, falling $5.30 or 0.3 per cent to US$1,774.80 an ounce.
