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Shares rose for a second day as mining and energy companies rallied ahead of this afternoon’s RBA rates announcement.
The S&P/ASX 200 climbed 27 points or 0.38 per cent by mid-session, extending Monday’s slender three-point advance.
Woodside Petroleum, BHP, Rio Tinto and Newcrest provided momentum. Afterpay and the banks acted as a brake.
What’s driving the market
The ASX stuck pretty closely to Wall Street’s overnight playbook. Energy and materials led, boosted by a ten-year high in copper, near-record iron ore prices and a rebound in oil. The tech and real estate sectors retreated. Only the financial sector ignored the script, taking a breather after lifting the index virtually single-handed yesterday.
Overnight, US cyclicals steered the Dow up 0.7 per cent and the S&P 500 up 0.27 per cent. Post-earnings selling in megacap growth stocks pulled the Nasdaq down 0.48 per cent.
The domestic market put on as much as 31 points in early action before trimming its advance in a repeat of yesterday’s action. Buying interest was crimped by declines in US futures and most Asian markets. S&P 500 futures slipped 12 points or 0.3 per cent this morning. The Asia Dow dropped 0.26 per cent. Hong Kong’s Hang Seng bounced 0.17 per cent. Markets in China and Japan remained closed for holidays.
“Global markets are reflecting subdued volumes amid Chinese Labour Day holidays, London’s bank holidays and Japan’s golden week,” Kalkine Group CEO Kunal Sawhney said. “Investors are also keenly eyeing the week’s line-up of key economic data releases.”
The Reserve Bank was due to release a revised policy outlook at 2.30 pm AEST this afternoon. The release was expected to foreshadow changes to the bank’s economic forecasts in Friday’s quarterly Statement on Monetary Policy (SoMP).
“We expect no change to rates or guidance in the RBA post-Meeting Statement, but as it is often the case ahead of the SoMP release on Friday, today’s Statement is likely to give us a flavour in terms of what to expect from the new RBA forecasts.” NAB Currency Strategist Rodrigo Catril said. “NAB believes the RBA’s forecast track for the economy will have to be upgraded in the SoMP, particularly the RBA’s unemployment forecasts given the unemployment rate at 5.6% is running nearly two years ahead of the RBA’s February baseline forecasts – those forecasts saw the unemployment rate at 5½% from mid-2022 until the end of 2022.”
Going up
BHP led a rebound in bulk metal producers, rising 2.2 per cent. Rio Tinto added 1.62 per cent. Fortescue trailled with a rise of 0.04 per cent.
Energy giants Woodside and Santos jumped 1.69 and 1.91 per cent, respectively. Oil Search gained 1.87 per cent and Beach Energy 3.33 per cent. Coles put on 1.35 per cent, Brambles 0.87 per cent and Telstra 0.57 per cent.
Gold stocks filled most of the slots atop the index after the yellow metal rallied for the first time in five sessions. Silver Lake Resources advanced 6.32 per cent, Ramelius 4.86 per cent and Resolute 4.74 per cent. Industry giant Newcrest tacked on 1.62 per cent.
A profit upgrade lifted Seek to an all-time high. The online employment marketplace raised its full-year net profit outlook to $150 million from $100 million after trading conditions over the first nine months of the year surpassed expectations. The share price hit a record $32.91 before trimming its advance to 3.32 per cent at $31.75.
Nine Entertainment edged up 0.35 per cent on news of a 20 per cent increase in digital subscription revenue and a double-digit reduction in costs. The media group also said it was nearing 150,000 subscribers to its new Stan Sports offering.
News that sales increased by 28 per cent over the first 44 weeks of this financial year versus the same period in FY2020 helped lift Super Retail Group 0.09 per cent. The increase was driven by strong growth at the company’s BCF and Macpac outlets.
Going down
Westpac trimmed yesterday’s 5 per cent interim earnings-fuelled surge, falling 1.11 per cent. ANZ retreated 0.98 per cent ahead of tomorrow’s half-year report. NAB, which reports on Thursday, fell 0.44 per cent. CBA bucked the downtrend with a rise of 0.38 per cent.
The tech sector followed the Nasdaq lower. Megaport declined 4.97 per cent, Altium 4.09 per cent, Nanosonics 4.05 per cent, WiseTech 1.98 per cent and Afterpay 1.77 per cent.
Flight Centre slid 4.43 per cent despite reporting a strong rebound in business. The travel agent said March turnover increased by $100 million or 32.7 per cent over February and it expected further growth last month. The company does not expect to return to profitability until next financial year.
Nick Scali slumped 4.11 per cent despite news the furniture retailer expects this year’s full-year net profit to increase 85 – 90 per cent from last financial year. The company expects earnings to be around $120 million for the year.
An increased cost base took some of the shine off a trading update from Domain Holdings. The real estate listings group said total revenue increased by 8 per cent last quarter, driven by an 8 per cent rise in digital revenue. However, the company also said it expects total costs to increase in the mid-single digits this financial year from $177.2 million last financial year. The share price eased 3.35 per cent.
NIB Holdings dropped 1.04 per cent after touching a 16-month high on news it had sold its digital healthcare directory platform to Commonwealth Bank for $9 million.
Other markets
Oil added to last night’s gains. Brent crude rose 17 cents or 0.25 per cent to US$67.73 a barrel.
Gold reversed $1.40 or 0.08 per cent to US$1,790.40 an ounce.
The dollar retreated 0.23 per cent to 77.41 US cents.
