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Aussie shares advanced as a third day of gains for mining stocks helped offset turmoil in the BNPL sector and an extension to the NSW lockdown.

The S&P/ASX 200 climbed 17 points or 0.23 per cent by mid-session.

Gains in Newcrest, Woodside and BHP helped outweighed sharp falls in Afterpay and other BNPL players on news Apple will launch an instalment payments plan.

What’s driving the market

The materials sector moved back towards the record highs of May, supported by strong Chinese trade data and optimism about demand for raw materials after China’s central bank loosened lending restrictions. The sector has been a strong performer over the last three weeks, rising almost 9 per cent while the broader market tracked sideways.  

Gold miner Newcrest gained 1.93 per cent. BHP added 0.16 per cent. Woodside Petroleum rose 0.48 per cent after US crude hit its highest level since October 2018.

Buy now pay later players tumbled on news Apple was working on an instalment payment  project that would compete directly with their offerings. The new service, known unofficially within Apple as ‘Apple Pay Later’, would allow consumers to pay for Apple Pay purchases in instalments. Goldman Sachs will partner on the project.

“Local BNPL players appear to be facing a severe test with the entry of Apple into the lucrative space, which could fuel substantial competition in the industry,” Kalkine Group CEO Kunal Sawhney said. “With the launch of Apple’s BNPL product, sector juggernaut Afterpay might no longer remain the only big fish in the ocean.”

Afterpay dived 8.65 per cent, Z1p Co 9.93 per cent and Sezzle 9.97 per cent. Openpay shed 4.92 per cent and Splitit 3.6 per cent.

The market took in its stride an announcement the Greater Sydney lockdown will be extended until at least July 30. The state recorded 97 new local Covid cases in the 24 hours to 8pm last night. Victoria recorded seven new cases linked to the NSW outbreak.

US stocks retreated overnight after data showed core consumer prices increased last month at the hottest pace in 30 years. The S&P 500 fell 0.35 per cent.

“An extended run of higher inflation has been fuelling concerns on Wall Street that the central bank might consider scaling back its bond purchases and withdrawing its low-interest-rate policies earlier than anticipated,” Kalkine’s Mr Sawhney said.

“Although, the Federal Reserve has continued to insist that current price pressures are majorly tied to temporary shortages that will melt away once supply catches up to demand. However, we cannot ignore the mounting fear that if inflationary pressures do not ease in the near future, it could jeopardise the country’s economic recovery.”

Going up

While the heavyweight miners provided the bulk behind today’s move, there were larger moves further down the food-chain. Lithium miner Orocobre had a record close within reach after rising 4.01 per cent.

In the gold space, Evolution Mining climbed 3.67 per cent, Silver Lake Resources 3.48 per cent and Ramelius 3.42 per cent. Gold rose overnight as inflation data encouraged hedging against currency moves.

A production beat and soaring copper prices helped Sandfire surpass full-year guidance. The miner generated unaudited sales revenue of $813 million. Managing Director Karl Simich said the result demonstrated the quality of the DeGrussa mine and the strength of copper prices. The share price climbed 1.27 per cent.

NAB edged up 0.08 per cent after confirming media reports it was interested in acquiring Citigroup’s Australian retail business. The bank said it was “in discussions with Citigroup”, but there was no certainty the discussions would lead to a transaction.

News of two new contracts with NBN Co helped lift shares in Downer EDI 0.45 per cent. Downer will provide design and construction services to extend fibre delivery across NSW and WA, as well as provide design and construction services across the national fixed wireless network.

Blackmores was among the morning’s best performers, rising 4.1 per cent amid speculation the vitamins maker might be the next target as a wave of takeovers sweeps the market. The company’s share price hit a five-year low last year as the pandemic knocked the bottom out of its lucrative daigou trade with China.  

Strength in the US dollar lifted companies with significant US operations. Aristocrat Leisure put on 1.49 per cent, Transurban 0.75 per cent, James Hardie 0.87 per cent and CSL 0.27 per cent.

Going down

Travel stocks were broadly lower in the wake of the NSW lockdown extension. Flight Centre declined 2.85 per cent, Webjet 2.16 per cent, Sydney Airport 0.32 per cent and Qantas 0.11 per cent.

A mixed morning for financial stocks saw ANZ ease 0.4 per cent, Westpac 0.2 per cent and Macquarie Group 0.08 per cent. CBA gained 0.38 per cent.

Humm Group fell 1.98 per cent despite announcing it will be Westpac’s NZ BNPL partner. Humm will partner with Red Bird Ventures, a subsidiary of Westpac NZ, to offer its ‘bundll’ product to New Zealanders using Westpac MasterCard.

Other markets

The ASX was an outlier as Asian markets followed Wall Street lower. The Asia Dow dropped 0.26 per cent, China’s Shanghai Composite 0.94 per cent, Hong Kong’s Hang Seng 0.63 per cent and Japan’s Nikkei 0.23 per cent.

US futures marked time ahead of another night of potentially market-moving data. S&P 500 futures eased less than a point or 0.02 per cent.

Oil trimmed last night’s advance. Brent crude faded 13 cents or 0.17 per cent to US$76.36 a barrel. Gold rallied $1.50 or 0.08 per cent to US$1,811.40 an ounce.

The dollar bounced 0.3 per cent to 74.61 US cents.

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