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Multi-month highs in mining stocks helped the share market regain a fraction of yesterday’s loss following a strong night on commodity markets.
The S&P/ASX 200 rose 12 points or 0.2 per cent as index heavyweight BHP touched its highest level since early February and Fortescue edged towards a record close.
The rally lost momentum after Prime Minister Scott Morrison warned renewed restrictions in Victoria could cost the economy up to $9 billion this quarter and push headline unemployment towards 10 per cent.
“This is a heavy blow,” he said.
The materials sector rose 1.9 per cent, spearheading the advance after solid gains on Wall Street overnight. The Dow Jones Industrial Average gained 373 points or 1.39 per cent after Disney surprised the market with a quarterly profit. The S&P 500 put on 0.64 per cent.
BHP climbed 4 per cent and Fortescue 1 per cent. Rio Tinto advanced 0.8 per cent but fell short of last month’s six-month peak. The rises followed overnight gains in iron ore, gold, oil and most base metals.
Gold miner Newcrest edged up 0.4 per cent as the precious metal’s record run showed no sign of flagging. Gold extended its winning streak into a fifth session, rising $4.60 or 0.2 per cent this morning to $US2,053.90 an ounce. The yellow metal has soared 34 per cent this year as investors sought alternative stores of wealth as the US dollar succumbed to the inflationary impact of stimulus efforts.
Woodside Petroleum climbed 1.2 per cent after oil marked a five-month high overnight. Oil Search gained 1.3 per cent and Santos 1.6 per cent. Brent crude edged up nine cents or 0.2 per cent this morning to $US45.26 a barrel.
A bright morning for “recovery plays” saw Corporate Travel Management rise 6.8 per cent, Webjet 6.2 per cent, Ooh!Media 4.9 per cent, Crown Resorts 2.2 per cent and Qantas 1.7 per cent. Retailer Harvey Norman charged 6.5 per cent after rival Nick Scali reported a surge in furniture sales (see below for more).
Declines in traditional defensive sectors, including healthcare, property and utilities capped the rally. ResMed fell 5 per cent (see below for more), Scentre Group 4.1 per cent, Centuria Industrial REIT 2.6 per cent, APA Group 1.1 per cent and CSL 0.7 per cent.
The big four banks struggled to rise off yesterday’s two-month lows. ANZ edged up 0.8 per cent, Westpac 0.2 per cent and NAB 0.1 per cent. CBA eased 0.3 per cent.
The S&P/ASX 200 slipped 0.6 per cent yesterday after Victoria recorded a record daily increase of 725 new coronavirus cases and Queensland announced it will re-close its border this weekend to NSW and the ACT. Victoria this morning reported 471 new cases. New South Wales recorded 12 new cases.
US index futures pared gains after a sharp downturn in Asian markets. S&P 500 index futures were recently up four points or 0.1 per cent. China’s Shanghai Composite sank 0.6 per cent, Hong Kong’s Hang Seng 1.3 per cent and Japan’s Nikkei 0.4 per cent.
The dollar briefly reclaimed the 72 US cents level before falling back to break-even at 71.92 US cents following the PM’s downbeat economic outlook.
What’s hot today and what’s not:
Hot today: News of a huge increase in furniture purchases by house-bound Australians propelled shares in Nick Scali (ASX:NCK) to an all-time high. The retailer reported a full-year net profit after tax of $42.8 million, thanks in large part to a sales rebound in May and June as ‘nesting’ Australians splurged on their homes. Written sales orders during the three months to July were up 70 per cent on the same period last year, getting the new financial year off to a buoyant start. The company expects first-half profit to be “up by at least 50-60 per cent” on last year. The share price surged 15.4 per cent to $8.86.
Not today: Medical equipment manufacturer ResMed (ASX:RMD) hit record levels last month but fell this morning after the CEO warned a profit surge from selling ventilators to treat COVID-19 will dissipate. In what Mick Farrell told the ABC RN Breakfast was “a tale of two markets”, year-on-year revenue increased by 9 per cent last quarter as ventilator sales offset a collapse in the company’s core sleep and respiratory care products. The share price slid 5 per cent as investors wondered if last quarter was as good as it gets until the pandemic passes.
