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Record iron ore production continued to drive share market gains, lifting the big three producers to fresh peaks as the wider market rebounded.

The S&P/ASX 200 climbed 25 points or 0.34 per cent by mid-session even as the NSW Covid-19 outbreak took a turn for the worse.

Record results helped Rio Tinto and Fortescue Metals join BHP at all-time highs. Other notable gains included Afterpay, Iress and Regis Resources. Index gains were kept in check by declines in Wesfarmers and the banks.

What’s driving the market

Iron ore producers have been this week’s big winners as quarterly reports confirm miners were cashing in on boom-time prices. The price of ore steadied above US$200 a tonne this week despite a Chinese clampdown on steel production.

Rio Tinto reported a record first-half profit of US$12.1 billion late yesterday. The miner said it will return three-quarters of underlying earnings to shareholders. Shares in the company soared 2.71 per cent this morning to a new high.   

A record fourth quarter helped Fortescue Metals join its chief competitors at record levels. The miner shipped 49.3 million tonnes of ore last quarter, beating production guidance for the year of 182 million. The share price improved 1.51 per cent.

“The Fortescue team has delivered excellent results for the June quarter, with record quarterly shipments of 49.3 million tonnes contributing to our highest ever annual shipments of 182.2 million tonnes in FY21,” Chief Executive Officer, Elizabeth Gaines, said.

“This was an outstanding performance despite the impact of wet weather, as well as COVID-19 restrictions.”

The largest of the big three, BHP, rose 1.58 per cent towards its third all-time closing high of the week. The Big Australian last week reported record ore production from its WA operations.

Strength in commodity prices helped lift June-quarter exports by 13.2 per cent. Import prices eased 2.5 per cent.

This morning’s mining rally helped offset grim news from NSW’s Covid-19 outbreak. The state government announced tighter restrictions for hot-spots after the state recorded a sharp increase in cases.

Health authorities recorded 239 new local cases and two deaths in the 24 hours to 8 pm last night. The government announced new police powers, as well as tighter mask rules and travel restrictions in hot spots.

“Things are likely to get worse before they get better given the quantity of people infectious in the community,” NSW Premier Gladys Berejiklian said.

The market took in its stride a mixed finish in the US overnight after the Federal Reserve left rates on hold and indicated no plans to raise any time soon. The S&P 500 finished flat. The Dow eased 0.36 per cent. Strength in ‘Big Tech’ lifted the Nasdaq 0.7 per cent.

Going up

Tech stocks surfed higher on the back of the Nasdaq’s relative outperformance overnight. Altium climbed 4 per cent, Megaport 3.95 per cent and Nextdc 3.62 per cent. BNPL leaders Afterpay and Z1P Co put on 2.99 and 4.57 per cent, respectively.

Iress flew up 12.71 per cent after the maker of trading software knocked back a takeover offer and launched a share buyback. The company said EQT Fund Management’s revised non-binding unsolicited offer of $15.30 – $15.50 “did not represent compelling value for Iress shareholders”. Discussions would continue. Meantime, Iress will buy back up $100 million of its shares.  

A cautious outlook capped gains in Macquarie Group as the company held its AGM. The investment bank said trading conditions had improved this quarter but “we continue to maintain a cautious stance, with a conservative approach to capital, funding and liquidity”. The share price edged up 0.17 per cent.

Notable gains at the heavyweight end included Newcrest +0.95 per cent, Woodside +0.64 per cent and CSL +0.34 per cent.

A record quarter lifted gold miner Regis 7.86 per cent. Managing Director Jim Beyer said the new financial year would see a material step up in scale.

Going down

Wesfarmers eased 0.57 per cent after takeover target Australian Pharmaceutical Industries (API) rejected the retail conglomerate’s unsolicited offer. The API board said the offer price of $1.38 per share undervalued the company and was not in the best interest of shareholders. The timing of the bid was “opportunistic” while the share price was depressed by lockdown restrictions. API shares inched up 1.24 per cent to $1.42.75, suggesting traders anticipate an improved offer.

A subdued morning for the banks saw ANZ edge up 0.11 per cent, while CBA dropped 0.04 per cent, NAB 0.19 per cent and Westpac 0.08 per cent.

A 10 per cent decline in quarterly production helped drag Resolute Mining down 8.85 per cent. The gold miner attributed the fall to power disruptions, maintenance stoppages and lower grades.

Other markets

Asian markets rebounded after Chinese state-run media tried to dampen jitters following several days of heavy falls. The Shanghai Composite rallied 0.81 per cent. Hong Kong’s Hang Seng gained 1.78 per cent. Japan’s Nikkei added 0.39 per cent and the Asia Dow 1.05 per cent.

A disappointing after-market update from Facebook weighed on US futures. S&P 500 futures dropped 11 points or 0.24 per cent. Nasdaq futures declined almost 0.4 per cent.

Oil built on an overnight two-week high. Brent crude rose nine US cents or 0.12 per cent to US$73.96 a barrel.

Gold added to this morning’s post-Fed rally. The yellow metal advanced US$14.70 or 0.82 per cent to US$1,814.40 an ounce.

The dollar sagged 0.18 per cent to 73.64 US cents.

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