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Aussie shares shook off a slump in US futures as two multi-billion dollar mergers helped maintain buying interest at 13-month highs.
The S&P/ASX 200 trimmed an early advance of 31 points to 15 points or 0.22 per cent at mid-session. The initial advance lifted the index to within 1.4 per cent of last year’s record.
The All Ordinaries climbed 16 points or 0.22 per cent to a third straight all-time high.
What’s driving the market
Most of the miners and banks advanced, offsetting weakness in Telstra, Woodside and Coles. Market sentiment was boosted by news of a $4 billion merger to create an Australian lithium powerhouse. Orocobre and Galaxy Resources intend to unite to form the world’s fifth largest lithium chemicals company.
If approved by shareholders, Orocobre will acquire 100 per cent of the shares in Galaxy. Under the scheme of arrangement, Galaxy shareholders will receive 0.569 Orocobre shares for each of their shares in a “merger of equals”. The yet-to-be-named merged entity will have its head office in Argentina, a corporate HQ on the Australian east coast and an office in Perth. Orocobre shares climbed 4.68 per cent to a three-year high. Galaxy shares gained 2.22 per cent.
Separately, real estate group Centuria Capital announced an off-market takeover of WA-based Primewest. The merged group would have $15.5 billion in assets under management. The Primewest board have unanimously recommended the merger. Shares in Centuria Capital rose 0.18 per cent. Primewest shares surged 3.41 per cent to an all-time high.
The market overcame an early wobble as US futures retreated ahead of another big week of corporate earnings. S&P 500 futures fell more than 0.3 per cent before paring their fall to seven points or 0.17 per cent. Dow futures sank 89 points or 0.26 per cent.
The futures retreat took some of the shine off a record finish on Friday. The S&P 500 and Dow both ended last week at all-time highs.
“The extremely supportive monetary and fiscal policy setting continues to provide a fertile environment for risk assets. The S&P 500 gained 0.36% on Friday, it’s closed at a new record high and recorded its sixth consecutive weekly gain. The Dow closed +0.48%, also at a record high while the NASDAQ climbed 0.1%,” NAB Currency Strategist Rodrigo Catril said.
Going up
A near-decade peak in iron ore lifted most of the major producers. Rio Tinto put on 0.98 per cent. Fortescue Metals added 1.18 per cent. Further down the food chain, Champion Iron climbed 4.06 per cent to a record. BHP eased 0.02 per cent ahead of Wednesday’s operational review.
CBA was the best of the banks, rising 0.89 per cent to its strongest level in six weeks. NAB gained 0.22 per cent, ANZ 0.54 per cent and Westpac 0.41 per cent. Wesfarmers rose 0.45 per cent to its highest point since early February, Goodman Group 0.41 per cent to its highest since January.
Crown Resorts edged up 0.63 per cent after a private equity fund offered to fund a buyout of James Packer’s stake in the casino group. Oaktree Capital Management would provide around $3 billion via a structured instrument so Crown could buy back the 37 per cent stake held by Packer’s Consolidated Press Holdings. Packer agreed last week to play no role in running the group after an inquiry found the casino was unfit to hold a licence.
Metals recycler Sims will refund $7.5 million in JobKeeper payments following rebound in volumes. The company forecast full-year underlying earnings of $260 – $310 million, thanks to higher scrap prices and improved margins. The share price jumped 9.93 per cent to its highest in two and a half years.
Medibank Private inched up 0.17 per cent after the health insurer announced Chief Customer Officer David Koczkar will take over as CEO.
Going down
Energy and tech stocks were the biggest drags following soft ends to the week in the US. Woodside Petroleum fell 1 per cent as crude started a new week on the back foot. Beach Energy slid 2.49 per cent and Santos 1.12 per cent. In the tech space, Nearmap shed 2.26 per cent and Afterpay 0.49 per cent.
Telstra slid further from last week’s eight-month, falling 1.6 per cent. CSL shed 0.23 per cent, Aristocrat Leisure 0.39 per cent, Coles 0.48 per cent and Brambles 1.13 per cent.
Shopping centre operator GPT Group eased 1.14 per cent from four-month highs on news it expects growth in funds from operations of around 8 per cent this financial year.
Chief Executive Officer, Bob Johnston, said, “The disruption to our operations is abating… The Group’s high quality portfolio has proved resilient throughout the pandemic. Consumer confidence continues to be strong driving foot traffic at our shopping centres, office utilisation is steadily increasing and demand for logistics assets remains strong reflecting the increased economic activity.”
Seven Group entered a trading halt to raise $500 million through a placement. Funds raised will be used to reduce debt and pursue growth opportunities.
Other markets
A bullish session on Asian markets saw the Asia Dow gain 0.24 per cent, China’s Shanghai Composite 1.07 per cent, Hong Kong’s Hang Seng 1.08 per cent and Japan’s Nikkei 0.2 per cent.
Gold pulled back following its best week this year. The yellow metal eased $2.30 or 0.13 per cent to US$1,777.90 an ounce, trimming last week’s 2 per cent advance.
“With China permitting domestic and international banks to import large amounts of gold into the country, five sources familiar with the matter said, it potentially helps to support gold prices after a months-long decline, according to media reports. After all, China is the world’s biggest gold consumer,” Axi Chief Global Market Strategist Stephen Innes said.
Brent crude declined 34 cents or 0.51 per cent to US$66.53 a barrel.
The dollar rose 0.17 per cent to 77.26 US cents.
