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Tech stocks led the advance as the ASX held its early gains through to the halfway mark for the first time this week.
The S&P/ASX 200 climbed 59 points or 0.88 per cent by mid-session, raising hopes for a positive end to a wobbly week. The market has struggled all week to hold onto its opening gains, closing yesterday just three points above where it started on Monday.
What’s driving the market
Today’s trading brought welcome relief for investors after previous advances met a wave of selling. Technology, energy and materials led a broad rally that lifted all sectors. Seventeen of the 20 heavyweights of the S&P/ASX 20 advanced.
US stocks rose overnight after bond yields declined and President Biden signed his stimulus package into law. The S&P 500 climbed 1.04 per cent to a record. The Dow scored a fourth straight all-time high and the Nasdaq surged 2.52 per cent.
“The Australian share market traded in the green, following cues from record highs of the Dow Jones and the S&P 500 as a retreat in bond yields eased concerns over inflation expectations,” Kalkine Group CEO Kunal Sawhney said. “Tame consumer prices data and a successful bond auction calmed market sentiments this week, pushing US Treasury Yields lower. The US weekly jobless claims at a four-month low and increased job openings indicating steady labour market recovery also boosted investors’ sentiments.”
Positive US futures helped the market overcome a brief mid-morning wobble. The index temporarily gave up around 30 points before reversing higher. S&P 500 futures were lately up six points or almost 0.2 per cent.
“The most recent developments on three of the main market drivers—stimulus, pandemic news, and inflation data— point to further equity upside,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said.
Going up
The tech sector climbed further away from Tuesday’s six-month low as a steady decline in bond yields eased pressure on earnings expectations. Xero rose 5.5 per cent, NextDC 4 per cent and Afterpay 3.4 per cent.
Strong overnight rebounds in iron ore and metals lifted the materials sector. Oz Minerals jumped 5.7 per cent and Mineral Resources 5.4 per cent. Fortescue Metals put on 2.5 per cent, BHP 2.5 per cent and Rio Tinto 0.9 per cent.
Energy was the morning’s other standout, climbing 2.3 per cent after Brent crude notched its best close since May 2019. Beach Energy added 2.8 per cent, Santos 2.7 per cent and Woodside 1.7 per cent.
“Oil prices roar to the sound of ringing gas pump counters as according to the US Department of Transportation, more and more folks take the highways ahead of what is likely to be the biggest pent up driving season on record as the US could reach herd immunity from Covid-19 by summer vacation time,” Axi Chief Global Market Strategist Stephen Innes said.
The banks were mixed following a retreat in bond yields. ANZ crept up 0.3 per cent and CBA 0.1 per cent. NAB dipped 0.1 per cent. Westpac shed 0.3 per cent after the Australian Prudential Regulation Authority (APRA) announced it had closed its investigation into the possible breaches of anti-money laundering and counter-terrorism laws. APRA Deputy Chair said the investigation found no breaches of the Banking Act.
Other heavyweight risers included Aristocrat Leisure +2.8 per cent, Wesfarmers +1.7 per cent, Goodman Group +0.9 per cent and Transurban +1.2 per cent. Supermarkets Woolworths and Coles nudged up 0.8 and 0.7 per cent, respectively.
Breville Group edged up 0.2 per cent despite news CEO Jim Clayton sold some of his shareholding. Clayton sold 328,338 shares to buy a house and meet tax obligations. He retained a holding of 180,393 and the rights to 427,650 additional shares.
Going down
The termination of a broadcasting partnership with Nine Entertainment sent Southern Cross Media down 9.3 per cent to its lowest level in four months. Nine announced it had signed a seven-year deal for WIN Corporation to broadcast Nine’s free-to-air content into Tasmania and parts of regional Australia. The switch ends a five-year partnership with Southern Cross. Nine shares climbed 0.7 per cent.
Travel and tourism stocks were mixed after JP Morgan doused expectations the federal government’s stimulus package will compensate for the end of JobKeeper. The investment bank said airlines would see most of the benefit, with travel agents seeing a much smaller share of the cake. Flight Centre retreated 3.8 per cent, Helloworld Travel 2.5 per cent and Webjet 0.3 per cent. Qantas dipped 0.5 per cent. Sydney Airport gained 2.1 per cent.
Gold stocks came under mild pressure following two days of gains. Northern Star fell 2.3 per cent, Silver Lake Resources 2.2 per cent and Newcrest 0.3 per cent.
Tassal Group dropped 3 per cent as it traded without its dividend.
Other markets
A positive morning across Asian markets saw the Asia Dow advance 0.59 per cent, China’s Shanghai Composite 0.3 per cent, Hong Kong’s Hang Seng 0.56 per cent and Japan’s Nikkei 0.56 per cent.
Brent crude eased 14 cents or 0.2 per cent to US$69.49 a barrel. Gold rose $1.90 or 0.1 per cent to US$1,724.50 an ounce.
The dollar edged up 0.16 per cent to 7.98 US cents.
