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Takeover action and a relief rally on Wall Street helped lift the share market towards back-to-back gains for the first time this month.

The S&P/ASX 200 reached mid-session 14 points or 0.2 per cent ahead. The index trimmed a 74-point opening surge as mining stocks reacted to soft Chinese economic data.

Battered tech stocks led for a second session. Supply-chain logistics heavyweight Brambles jumped 10.74 per cent following an approach from a multinational private-equity firm.

What’s driving the market

The repairwork that started on Friday following four weeks of ASX losses continued after Wall Street booked strong rebound gains. The S&P 500 bounced 2.39 per cent. The Nasdaq Composite soared 3.82 per cent, its biggest rally since 2020.

The ASX 200 has not strung together consecutive gains since late April. Last week, the index sank 1.8 per cent as investors pared their exposure to a global slowdown as interest rates rose and China battled Covid outbreaks in major cities.

Weekend news that Shanghai would start to emerge from lockdown this week bolstered sentiment at the open.

“The mayor of Shanghai said the city was aiming to start an ‘orderly opening-up’ by May 20th, which provides some light for global supply chains. The first stage of this process has been unveiled over the weekend, with supermarkets, department stores, hairdressers, and pharmacies, to be gradually reopened from today,” NAB’s Director, Economics, Tapas Strickland, said. 

“However, whether Shanghai can remain lockdown free (and whether Beijing can avoid it) is another matter.”

Value investors were encouraged by an approach for Brambles from Luxembourg-based CVC Capital Partners. The Australian pallets business said it had held “preliminary, incomplete” discussions with CVC regarding an unsolicited proposal to acquire the company. No formal proposal had been received yet.

The company said “there is no certainty that the engagement will lead to a binding proposal being received from CVC”.

Automotive parts and service software provider Infomedia jumped 30.47 per cent on a takeover offer from private-equity firm TA Associates Management. The US firm offered $1.70 per share, a 32.8 per cent premium to Infomedia’s share price on May 12. Infomedia stoked hopes of a bidding war by declaring it was in preliminary discussions with “other interested parties”.

“The Board intends to consider the Indicative Proposal from TA, alongside the expressions of interest, in an orderly manner and in the best interests of all Infomedia shareholders,” the board said. Credit Suisse will advise.

Going up

The tech sector extended its recovery from last week’s two-year low. The sector rose 1.8 per cent in the wake of Friday’s Nasdaq outperformance.

Life360 jumped 3.7 per cent, Block 3.94 per cent and Xero 3.29 per cent. Megaport added 2.77 per cent, Nanosonics 2.17 per cent and Nextdc 2.39 per cent.

Rate-sensitive consumer stocks also recovered. The sector has been under pressure amid questions about the outlook for consumer spending as rising rates reduce spending power.

Domino’s Pizza delivered a rise of 5.18 per cent. A2M Milk Company gained 2.47 per cent, 4.32 per cent and Corporate Travel Management 3.21 per cent.

Industrial property giant Goodman gained 0.64 per cent after reaffirming full-year guidance. The company expects full-year operating earnings per share growth of 23 per cent and a full-year distribution of 30 cents per share.

A production upgrade boosted Cooper Energy 1.89 per cent. The gas producer narrowed its full-year production forecast to the upper range of previous guidance.

Going down

The major miners gave up early gains following late-morning news Chinese industrial output declined last month under lockdown. BHP sank 2.01 per cent, Rio Tinto 1.89 per cent and Fortescue Metals 1.75 per cent.

Healthcare heavyweight CSL retreated 0.62 per cent from Friday’s four-month high. Macquarie Group‘s shares fell 1.31 per cent as they traded without the right to the bank’s latest dividend.

Weak US sales prompted performance management software provider Integrated Research to downgrade its full-year profit forecast. The firm said it now expected net profit to be below last year. The share price slumped 16.18 per cent to a ten-year low

An earnings downgrade tore the bottom out of shares in underwear retailer Step One Clothing. The share price plummeted 55.21 per cent to an all-time low after the firm halved its full-year earnings outlook to $7-$8.5 million from previous guidance of $15 million.  

Other markets

US futures wilted after a disappointing 12 pm AEST Chinese economic update. S&P 500 futures dived 23 points or 0.57 per cent.

Asian markets faded as the morning advanced. The Asia Dow dipped 0.02 per cent. China’s Shanghai Composite lost 0.23 per cent. Hong Kong’s Hang Seng shed 0.09 per cent. Japan’s Nikkei clung to a gain of 0.22 per cent.

Oil retreated with other risk assets. Brent crude declined US$1.65 or 1.5 per cent to US$109.90 a barrel.

Gold edged up US$1 or 0.05 per cent to US$1,809.20 an ounce.

The dollar dropped 0.76 per cent to 68.95 US cents.

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