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Iron giants BHP and Rio Tinto powered the ASX 200 to its highest level in two weeks after the price of ore neared US$150 a tonne.
The Australian benchmark shrugged off soft US leads, rising 71 points or 1 per cent by mid-session. The index pushed above 7200 for the first time since January 21 and was lately around 20 points off its session peak at 7181.
The big three ore miners scaled multi-month highs amid signs Chinese authorities are keen to spur infrastructure spending. Macquarie Group and Suncorp rallied on well-received earnings updates. A sales downgrade drove health junior Nanosonics down 8 per cent.
What’s driving the market
Steel and iron ore prices jumped yesterday after Chinese state planners called for greater investment in infrastructure. The National Development and Reform Commission said authorities should implement 102 major projects scheduled under the Communist Party’s latest five-year plan. The call came as the world’s heaviest consumer of raw materials struggles with a property slowdown.
Shanghai steel prices improved 1.7 per cent. The spot price for ore landed in China rose US$2.80 or 1.9 per cent to a five-month high at US$149.40 a tonne. Ore prices have bounced 55 per cent in three months, defying Chinese attempts to curb speculative buying.
Industrial metals rallied as Chinese buyers returned to market after a week-long national holiday.
“Chinese traders returned from the Lunar New Year holiday in a bullish mood,” ANZ senior commodity strategist Daniel Hynes said. “Aluminium touched its highest level in more than three months amid supply disruptions in China. A resurgence in COVID cases has disrupted supply chains, resulting in a sudden build of inventories in certain regions.”
BHP climbed 3.59 per cent to its highest since mid-August. Shares that traded as low as $35.77 during the September downturn hit $49.17 today.
Rio Tinto was also near a six-month high, up 3.39 per cent. Fortescue Metals gained 2.79 per cent and Champion Iron 3.26 per cent.
The commodities rally helped offset a late fade on Wall Street. The S&P 500 gave up its gains at the end of a see-saw session, finishing 0.37 per cent lower. The Dow closed flat. The Nasdaq Composite shed 0.58 per cent as Facebook owner Meta Platforms continued to slide.
Going up
A “record quarter” lifted Macquarie Group back above $200 per share. The share price rallied 4.57 per cent to $202.88 as assets under management grew 2 per cent to $750.1 billion. The company did not offer detailed full-year guidance or define a “record quarter”.
Insurer Suncorp rose 6.14 per cent as strong banking profits and top-line growth helped buyers look beyond declines in half-year earnings and group profit. Banking profit after tax increased 5.3 per cent to $200 million. Home lending expanded at an annual rate of 5.3 per cent. Group net profit fell 20.8 per cent as the insurer paid claims on 19 weather events.
Rising property prices helped SCA Property Group book a 320.2 per cent increase in half-year net profit of $432.4 million. The value of the firm’s investment portfolio increased by $426.4 million to $4.426 billion. The share price improved 3.75 per cent.
Travel and tourism stocks rose for a second day following yesterday’s announcement the international border will reopen to vaccinated travellers on February 21. Flight Centre climbed 3.7 per cent, SkyCity Entertainment 4.95 per cent and Corporate Travel Management 3.72 per cent. Qantas gained 0.37 per cent, Helloworld Travel 1.66 per cent and Webjet 2.09 per cent.
Santos edged up 0.26 per cent after taking a step towards decarbonising by booking 100 million tonnes of carbon dioxide storage in South Australia’s Cooper Basin.
“CCS [carbon capture and storage] is a critical technology to achieve the world’s emission reduction goals and we only have to look at current carbon prices to see how valuable 100 million tonnes of storage is,” Santos MD and CEO Kevin Gallagher said.
The major banks rallied with long-term interest rates. The yield on ten-year Australian government bonds jumped eight basis points to a three-month high. Westpac put on 1.44 per cent, ANZ 1.24 per cent, NAB 0.54 per cent and CBA 0.32 per cent.
Going down
Nanosonics fell 7.94 per cent to a pandemic-era low after a shake-up of its US sales model prompted a one-off hit to guidance for this half. The transition to a new model with US partner GE Healthcare will knock a hole in full-year revenue of $13-$16 million.
“The revision to the North American sales model represents another significant milestone in the ongoing growth of the organisation and is consistent with our evolution to an increasingly direct sales model and OEM capital reseller channel strategy over time,” Michael Kavanagh, Nanosonics CEO and President, said.
The tech sector came under pressure from a rise in borrowing costs and overnight pressure on the Nasdaq Composite. Afterpay owner Block declined 6.66 per cent, Appen 7.07 per cent and Novonix 2.46 per cent.
Supermarkets Woolworths and Coles shed 1.05 and 0.36 per cent, respectively. Wesfarmers fell 0.58 per cent.
Noel Meehan was confirmed as CEO at automotive parts business Bapcor. Meehan had acted in the role since the expedited departure of Darryl Abotomey. Meehan was formerly the firm’s Chief Financial Officer. The share price eased 0.14 per cent.
Other markets
A mixed morning on Asian markets saw the Asia Dow ahead 0.59 per cent and Japan’s Nikkei up 0.49 per cent. China’s Shanghai Composite dipped 0.22 per cent. Hong Kong’s Hang Seng shed 0.42 per cent.
US futures trimmed early gains. S&P 500 futures were recently ahead three points or 0.07 per cent.
Oil continued to fall back from a seven-year high. Brent crude declined 42 US cents or 0.46 per cent to US$92.26 a barrel.
Gold rose 90 US cents or 0.05 per cent to US$1,822.70 an ounce.
The dollar firmed 0.06 per cent to 71.3 US cents.
