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The ASX surrendered most of its early gains as a rise in US index futures on the well-worn promise of “progress” in stimulus negotiations failed to persuade local investors.
After rising as much as 22 points, the S&P/ASX 200 reached mid-session just six points or 0.1 per cent ahead.
What’s driving the market
The index briefly reclaimed the 6200 level this morning on gains in banks, iron ore miners and energy stocks, but lacked the momentum to threaten Monday’s seven-month peak of 6248. The fierce early October rally has given way to a week of sideways action as the market consolidates those gains and awaits fresh catalysts.
US index futures provided cause for early optimism, climbing after the White House and Democrats again talked up stimulus negotiations. S&P 500 futures advanced 14 points or 0.4 per cent.
White House Chief of Staff Mark Meadows said Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi made “good progress” in talks this morning, but “still have a ways to go”. Pelosi’s Deputy Chief of Staff Drew Hammill said, “Their conversation provided more clarity and common ground as they move closer to an agreement… Both sides are serious about finding a compromise.”
US stocks rose overnight but finished off their highs as investors awaited news on the protracted negotiations. The S&P 500 gained 0.47 per cent. The Dow slashed its final tally from more than 300 points to 113 points or 0.4 per cent.
Going up
The energy sector had its highest close in more than two months in sight, rising 1.5 per cent after crude oil rallied overnight for the first time in four sessions. Oil Search gained 3.9 per cent, Santos 2.5 per cent and Woodside 1.8 per cent.
The banks and iron ore miners provided the muscle behind the advance. ANZ gained 1.7 per cent, NAB 1.2 per cent, Rio Tinto 1.1 per cent, BHP 0.7 per cent, CBA 0.4 per cent and Westpac 0.3 per cent.
The quarterly reporting season provided most of the morning’s fireworks at both ends of the index. Property group Dexus put on 1.7 per cent after announcing it expects distributions this financial year to match last year as rent collections improve. Rare earths producer Lynas advanced 3.7 per cent to a 16-month peak on news of a rebound in production and a doubling in sales revenue to $87 million.
Packager Orora was the morning’s standout, surging 8 per cent to its strongest level since late June after MD and CEO Brian Lowe confirmed first-quarter earnings from the Australian beverages business were in line with the same period last year. Toll road operator Atlas Arteria edged up 0.2 per cent on news of a rebound in traffic and revenue last quarter.
Going down
The index’s slender gains were capped by declines in REITs, supermarkets Woolworths (-1.1%) and Coles (-1%), retail conglomerate Wesfarmers (-1%) and health giant CSL (-0.9%). Iron ore miner Fortescue Metals shed 0.3 per cent.
Megaport kept a lid on the tech sector, slumping 10.4 per cent following a poorly-received trading update. EML Payments eased 1.9 per cent.
Some of the shine came off homeware retailer Temple & Webster following a seven-month run when shares charged from under $2 to more than $14. The retailer’s shares tanked 14.5 per cent despite news at today’s virtual AGM that last quarter’s earnings of $8.6 million were greater than the all of the previous 12 months.
Other companies to lose ground following quarterly updates were goldminer St Barbara, down 1 per cent, miner Silver Lake Resources, down 1.5 per cent, and Alkane Resources, down 3.2 per cent.
Other markets
A mixed morning on Asian markets saw China’s Shanghai Composite drop 0.1 per cent, Hong Kong’s Hang Seng rise 0.5 per cent and Japan’s Nikkei ahead 0.3 per cent.
Oil pared overnight gains. Brent crude eased 27 cents or 0.6 per cent to $US42.89 a barrel. Gold rose $1.90 or 0.1 per cent to $US1,917.30 an ounce.
The dollar improved 0.26 per cent to 70.68 US cents.
What’s hot today and what’s not:
Hot today: There is nothing like news of visible gold to set speculators’ pulses racing. Shares in Thor Mining (ASX:THR) more than doubled in value after the miner reported visible gold in steam sediment sample panning at its Ragged Range project in the Pilbara. Thirteen of 54 sites delivered visible gold in panning along a 13km corridor, raising hopes the company is onto something big. The share price charged from 1.5 cents to 4 cents and was lately up 140 per cent at 3.6 cents.
Not today: A wild week for investors in Holista CollTech (ASX:HCT) soured this morning after the biotech was put on notice over breaches of its continuous disclosure obligations. Corporate watchdog ASIC placed restrictions on how the company can raises fund over the next year. The decision followed what ASIC described as the company’s failure to update the market about revenues in a timely fashion or inform investors that the company’s Path-Away product was being tested on feline coronavirus, not Covid-19. Shares in Holista that hit 20 cents on Monday slumped 24.4 per cent today to 8.7 cents.
