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Market heavyweights CBA and CSL propelled the ASX to a pandemic-era high despite a poorly-received update from ANZ and weak leads from the US.
The S&P/ASX 200 rallied 52 points or 0.73 per cent to 7120 by mid-session, regaining the 7100 handle for the first time since February 2020. Today’s peak brought the index within 75 points of last year’s record.
The broader All Ordinaries rose 43 points or 0.59 per cent to a new all-time high.
What’s driving the market
Seven out of eleven sectors retreated in early action before the companies with the biggest index weightings led a push to new highs. The big three – Commonwealth Bank, BHP and biotech CSL – all advanced.
CBA surged 2.37 per cent to its strongest level in six years as traders rotated out of ANZ following an interim earnings report, and after rival Westpac was charged with insider trading. CBA yesterday acquired health tech platform Whitecoat, furthering the bank’s plans to expand its footprint in the sector.
CSL climbed 2.64 per cent after outlining how the company navigated the hit from Covid to its core business of plasma collection. In a presentation to the Macquarie Australia Conference, the company said it had expanded its operations, increased compensation for donors and invested in advertising/marketing. The company will open 25 new collection centres in the US this financial year and 40 in FY2022.
ANZ sank 1.94 per cent as investors sniffed at a 45 per cent surge in half-year statutory profit and a doubled dividend. Cash profit declined 10 per cent. The bank will pay a fully-franked interim dividend of 70 cents per share, twice the last payout.
A jump in US futures helped offset jitters following a broadly negative night in the US. S&P 500 futures climbed 12 points or 0.29 per cent. Overnight, the S&P 500 slumped 0.67 per cent and the Nasdaq Composite lost 1.88 per cent after Treasury Secretary Janet Yellen suggested rates might rise to stop the economy overheating.
“The key question for markets out of the overnight session is how should we interpret Yellen’s comments? And does that add to views the Fed may need to hike sooner than their dot plot suggests? Delving into Yellen’s remarks, it’s not clear whether she actually said anything new,” NAB Currency Strategist Rodrigo Catril said.
“A subsequent [Wall Street Journal] interview suggests her comments were also nothing new, with Yellen having previously stated that she doesn’t expect inflation to be a problem and that tools are available if inflation does pick up,” he added.
Going up
While CSL and CBA, led the advance, bulk metals miners gained momentum as the morning advanced. Buying interest was boosted by gains in iron ore and industrial metals overnight.
“Industrial metals continue to power on amid rising inflation expectations which hit a two-week high, while exchange inventories fell across the board, which provided further support. Investors have been increasingly focused on re-openings and the demand recovery, especially outside of China, which has become more evident of late,” ING commodities strategists Warren Patterson and Wenyu Yao wrote.
BHP climbed 1.37 per cent, Rio Tinto 1.64 per cent and Fortescue Metals 0.62 per cent. Worley put on 2.81 per cent, Iluka 2.87 per cent and South32 0.85 per cent.
Westpac shrugged off its latest run-in with the regulators, rising 0.5 per cent. ASIC filed civil proceedings against the bank over alleged insider trading relating to interest rate hedging activity during the Ausgrid privatisation in 2016.
Investors in Nearmap endured a rollercoaster ride. Shares in the aerial mapping group bolted 14.56 per cent following a profit upgrade, then entered a trading halt so the company could respond to “potential legal proceedings”. Prior to the halt, the company raised its full-year guidance for the value of annual contracts to $128-$132 million from previous guidance of $120-$128 million.
Amcor hit a five-month peak after raising its guidance to reflect a rebound in demand for packaging. The company lifted its full-year adjusted earnings per share guidance by 14-15 per cent. Shares rallied as high as $15.98 before shaving their advance to 2.83 per cent at $15.83.
Medibank Private rose 1.97 per cent on news the health insurer expects to grow policyholder numbers by 3.5-4 per cent this financial year, up from previous guidance of 3 per cent.
QBE rallied 4.08 per cent after Chair Mike Wilkins flagged the resumption of dividend payments this year as trading conditions improve. The insurer expects to pay out up 65 per cent of adjusted cash profit.
“Strong market conditions are continuing into 2021 as evidenced by the 8.9% premium rate increase achieved in the first quarter, compared with 7.3% in the first quarter of 2020. Each of our divisions achieved premium rate increases in line with expectations and stronger than the increases recorded in the prior corresponding period, including 10.2% in North America, 9.1% in International and 7.5% in Australia Pacific,” he told today’s AGM.
Going down
Heavy selling in high-growth US stocks overnight left the local tech sector staring down the barrel. Altium declined 2.89 per cent, Afterpay 3.23 per cent, WiseTech 1.58 per cent and Appen 1.34 per cent. Nuix sagged 2.9 per cent to a new low.
Goldminer Newcrest reversed 0.83 per cent. Other heavyweight drags included Goodman Group -0.42 per cent and Coles -0.39 per cent.
Other markets
The Asia Dow advanced 0.36 per cent despite weakness across much of the region. Hong Kong’s Hang Seng eased 0.09 per cent and Singapore’s main index fell 0.73 per cent. Markets in China and Japan were closed for the last day of this week’s holidays.
Oil and gold rallied as the US dollar pulled back from overnight highs. Brent crude jumped 79 cents or 1.15 per cent to US$69.67 a barrel. Gold rose $4.40 or 0.25 per cent to US$1,780.40 an ounce.
The dollar bounced 0.29 per cent to 77.35 US cents.
