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The share market punched out a fourth straight all-time high, bolstered by strong corporate earnings and gains in the big banks.

The S&P/ASX 200 pushed further into blue skies, hitting a fresh record at 7567 before paring its gain to 12 points or 0.16 per cent at 7550.

Insurers rallied on strong earnings from Suncorp. The big four banks tested multi-week highs as lending rates improved. Gold miners slid following a fleeting collapse in the precious metal below US$1,700 an ounce.

What’s driving the market

Positive US leads and expectations for a rebound in corporate earnings helped the market extend a run of records. The ASX 200 has broken fresh ground on five of the last six sessions.

Financials provided most of the momentum in the US on Friday as strong jobs data triggered a surge in bond yields. The S&P 500 climbed 0.17 per cent and the Dow 0.41 per cent to all-time closing highs.  

The Australian financial sector climbed 1.6 per cent to within a hair’s breadth of a record. Well-received earnings from Suncorp lifted rivals IAG and QBE, which report later this week..

Westpac rallied 1.41 per cent after announcing the sale of its life insurance business to Japanese insurer TAL Dai-ichi Life Australia for $900 million. The sale is the latest in a series of divestments as the bank moves towards a leaner business model.

A bounce in lending rates lifted the rest of the banks. The yield on ten-year Australian government bonds rose four basis points to 1.236 per cent. CBA advanced 1.49 per cent to a seven-week high. ANZ added 1.47 per cent and NAB 1.31 per cent. Macquarie Group firmed 1.41 per cent.

Miners were the biggest drag on the index as share prices played catch-up with recent weakness in iron ore, base metals and gold. Westpac senior economist Justin Smirk warned last month’s action added to signs of a cyclical peak in demand.

“July was a very mixed month for commodities but, overall, we believe we are seeing signs consistent with nearing a cycle top,” Mr Smirk said. “While there remains some near term upside risks overall we expect prices to find a peak in 2021 and to then start correcting through 2022.”

Iron ore was the biggest drag last month. “There are already signs that Chinese demand [for ore] is starting to moderate. Crude steel production dipped 5.6% in June, in itself not much of a move for such a volatile series but it follows on from a couple of soft months after the 13.2% surge in March,” he said.

Going up

A rebound in earnings, a share buyback and a special dividend helped lift Suncorp to a pandemic-era high. The insurer increased full-year cash earnings 42.1 per cent to $1.064 billion and raised its net profit 13.1 per cent to $1.033 billion.

The company declared an eight cent special dividend and said it will buy back up to $250 million of its shares on-market. The share price jumped 8.18 per cent to its strongest level since February 2020.

Rivals IAG and QBE rose 4.21 per cent and 3.3 per cent, respectively. Both companies report later this week.

Aurizon inched up 0.25 per cent to its highest level since December despite flat full-year earnings and profit. Statutory net profit was steady at $607 million. Group earnings eased 1 per cent to $903 million amid a drop in coal tonnages due to Covid and Chinese restrictions on imports.

Telstra edged up 0.39 per cent on news the telco will expand its move into digital healthcare by acquiring GP management software firm MedicalDirector for $350 million. The announcement follows news Telstra will take a majority stake in global healthcare firm PowerHealth.

A 3.2 per cent increase in operating earnings and a profit of $618.3 million helped lift Charter Hall Long WALE real estate investment trust 2.71 per cent.

Beyond the financial space, the pick of the heavyweights were Aristocrat Leisure +1.19 per cent, Goodman +0.92 per cent and Woodside +0.27 per cent.

Going down

Gold stocks crumbled after a volatile morning on precious metals markets. A spike in the US dollar and US treasury yields pushed the yellow metal down US$45.80 or 2.5 per cent on Friday. Gold dived as low as US$1,672.80 an ounce in US electronic trade this morning before trimming its loss to US$22.20 or 1.28 per cent at US$1,740.40 an ounce.

Gold Road Resources skidded 6.04 per cent, Ramelius 5.13 per cent, Perseus 5.08 per cent and Newcrest 2.45 per cent.

Iron ore miner Fortescue Metals gave up 1.56 per cent, Rio Tinto 1.19 per cent and BHP 0.63 per cent.

Toll road operator Transurban declared a statutory full-year profit of $3.272 billion, thanks in large part to the sale of a stake in its US assets. A 7 per cent decline in traffic was largely offset by contributions from new toll roads. The share price eased 1.61 per cent.

“Since the end of the financial year we have seen restrictions reimposed in Sydney, Melbourne and Brisbane, impacting traffic across all three regions,” Chief Executive Officer Scott Charlton warned.

Vulcan Energy eased 2.19 per cent on news the lithium miner will apply to list on the Frankfurt Stock Exchange, in addition to its ASX listing. The company said dual listing will increase its international profile and open up new investment avenues.

Aged care provider Regis slid 8.1 per cent after identifying up to $40 million in underpayments to staff. The company said employee entitlements under enterprise agreements had been entered inaccurately into the payroll system.

A 50 per cent collapse in demand for bricks during a lockdown pause in construction in Sydney forced Brickworks to halt production at two of its five NSW kilns. The company said it had temporarily reduced staffing at various facilities but had “no intention of laying off any staff”. The share price dropped 2.46 per cent.

News Corp slumped 8.04 per cent, reversing Friday’s earnings-fuelled surge after overseas investors proved harder to impress. The media giant’s US listing dropped 0.52 per cent on Friday night.

Other markets

US futures started a new week on the back foot as the US dollar rallied and crude declined. S&P 500 futures dropped nine points or 0.21 per cent. Nasdaq futures retreated 0.37 per cent.

Oil added to last week’s heavy losses. Brent crude fell US$1.40 or almost 2 per cent to US$69.30 a barrel.

Asian markets improved as the morning advanced. The Asia Dow put on 0.47 per cent, China’s Shanghai Composite 0.3 per cent and Hong Kong’s Hang Seng 0.8 per cent. Trade in Japan was suspended for a public holiday.

The dollar rallied 0.25 per cent to 73.54 US cents.

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