Join our daily newsletter At The Bell to receive exclusive market insights
The share market climbed to its highest level in almost a year as trading updates from BHP and NAB bolstered confidence in the economic recovery.
The S&P/ASX 200 rose as high as 6914, its strongest reading since February 25 last year, before trimming its advance to 26 points or 0.38 per cent at 6893 mid-session.
What’s driving the market
Cyclical stocks led the rally following well-received reports from BHP and NAB. The materials sector gained 1.6 per cent, energy 1.4 per cent and industrials 0.6 per cent. Advances in cyclicals offset weakness in growth sectors and bond proxies.
BHP announced a 16 per cent increase in underlying profits and a record half-year dividend. The board raised the interim dividend to US$1.01 per share after underlying profits climbed to $6.036 billion amid a boom in raw materials. The underlying return on employed capital rose to 24 per cent.
“Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change. These factors, combined with population growth and rising living standards, are expected to drive continuing growth in demand for energy, metals and fertilisers,” CEO Mike Henry said.
Shares in the Big Australian hit a three-week high and were last up 2.1 per cent. Rivals Rio Tinto and Fortescue Metals, which report later in the week, rallied 3.1 and 1.2 per cent, respectively.
A flat quarter was enough to lift NAB 0.9 per cent to its highest level in almost a year. Statutory net profit was steady at $1.7 billion. Cash earnings were 47 per cent stronger than the first half of FY20. CEO Ross McEwan said the outlook was muddied by health alerts and the impact of winding down JobKeeper.
ANZ and Westpac followed their rival to 50-week peaks, rising 1.4 and 1 per cent, respectively. Commonwealth Bank retreated 1 per cent as it traded without its dividend.
The market overcame a mid-morning wobble as US futures rallied ahead of the resumption of trade tonight following the President’s Day long weekend. S&P 500 futures were lately up 25 points or 0.6 per cent.
The minutes from this month’s Reserve Bank policy meeting reaffirmed the prospect of record-low interest rates for years to come. At the meeting, the bank left the cash rate at 0.1 per cent.
“Members concluded that very significant monetary support would be required for some time, as it would be some years before the Bank’s goals for inflation and unemployment were achieved. Given this, it would be premature to consider withdrawing monetary stimulus,” the minutes said.
Going up
A 13-month high in crude lifted oil producers. Woodside put on 1.5 per cent and Santos 1.4 per cent.
Outside the resources and financial spaces, gains at the top end were limited. Toll road operator Transurban tacked on 1.2 per cent and Brambles 0.4 per cent.
CSL rallied 0.9 per cent after the Therapeutic Goods Administration granted provisional approval to AstraZeneca’s Covid vaccine. CSL will manufacture the vaccine in Melbourne.
The morning’s best performers were Seven West Media, up 16 per cent after striking a content deal with Google, and Z1P Co, up 8.9 per cent to a record as the BNPL sector continued to run hot.
A swing back to profitability lifted metals recycler Sims 7.8 per cent. Improvements in margins and prices, plus lower costs, contributed to a $53 million half-year net profit.
Strong demand for personal protective equipment helped Ansell lift profits by 61.3 per cent to US$106.5 million. Shares rose 1.1 per cent after the company boosted its interim dividend from 21.75 cents last year to 33.2 cents.
A rebound in IVF treatments helped Virtus Health double its half-year profit to $29 million. Shares in the company rallied 0.4 per cent.
Going down
Consumer stocks retreated following a string of poorly-received trading updates. A dividend cut helped send appliance manufacturer Breville down 2 per cent. Investors in Redbubble drove the share price down 18 per cent despite revenue almost doubling to $417.6 million as the online marketplace delivered a net profit of $41 million.
The biggest drag on the consumer staples sector was an unexplained dive in Treasury Wine Estates. Shares in the Penfolds maker tumbled as much as 12 per cent before paring their fall to 2.8 per cent. The company is due to deliver its half-year result tomorrow.
Online property listings group Domain Holdings hit a record this month, but retreated 4.3 per cent today after dashing dividend expectations. The company deferred any dividend until its full-year result despite a 52.2 per cent increase in half-year net profit to $19.4 million.
Adairs faded 2.4 per cent after reporting a 233 per cent surge in net profit to $43.9 million. The decline came after the furniture retailer announced it would repay $6.1 million in JobKeeper payments.
Beach Energy tumbled 3 per cent following a broker downgrade from Goldman Sachs in the wake of yesterday’s profit disappointment.
Besides Commonwealth Bank, the biggest drags at the big end of the market were Afterpay -1.4 per cent, Wesfarmers -1 per cent, Aristocrat Leisure -0.9 per cent, Newcrest -0.9 per cent and Telstra -0.6 per cent.
Other markets
The positive mood extended into Asia, where Japan’s Nikkei added 1.28 per cent and Hong Kong’s Hang Seng 1.66 per cent. Chinese markets remained closed for the Lunar New Year.
Oil added to last night’s 13-month high. Brent crude improved 12 cents or 0.2 per cent to $US63.42 a barrel. Gold inched up 60 cents or less than 0.1 per cent to $US1,823.80 an ounce.
The dollar climbed 0.17 per cent to 77.97 US cents.
