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A rebound in oil and a six-month high in tech stocks helped the ASX rise for a second session as the mood on global markets continued to improve.
The S&P/ASX 200 firmed 30 points or 0.4 per cent by mid-session.
Woodside Petroleum, Newcrest and Rio Tinto were the pick of the heavyweights. Support came from Afterpay, BHP and the banks. Supermarkets and other defensive assets declined.
What’s driving the market
Encouraging Covid news from the US and China brought buyers back to Wall Street following last week’s growth jitters. The S&P 500 hit an intraday record before ending 0.85 per cent ahead. The Nasdaq Composite jumped 1.55 per cent to an all-time closing high.
“Overnight the [US Food and Drug Administration] granted full approval to the Covid-19 vaccine made by Pfizer Inc. and BioNTech. The approval is the first for a Covid vaccine in the US and it is expected it will boost the immunisation, as the approval should increase confidence on the vaccine safety and effectiveness,” NAB currency strategist Rodrigo Catril said.
“Yesterday, China reported zero new community cases of COVID19 for the first time since its current outbreak began just over a month ago,” he added.
Crude oil and other commodities rebounded. Brent crude surged US$3.57 or 5.5 per cent to settle at US$68.75 a barrel. The rally broke a seven-session losing run.
The Australian energy sector bounced 2.5 per cent off a nine-month low. Woodside Petroleum climbed 3.4 per cent, Beach Energy 3.32 per cent and Santos 2.61 per cent.
Tech was the morning’s other star performer, touching a six-month peak as borrowing costs laboured near six-month lows. Nearmap gained 2.86 per cent, Computershare 2.5 per cent, Afterpay 1.5 per cent and Xero 1.11 per cent.
Going up
Optimism over the US vaccine approval appeared to trigger a run on beaten-up travel and tourism stocks. Webjet firmed 7.49 per cent, Flight Centre 7.15 per cent, Qantas 5.02 per cent and Corporate Travel Management 3.44 per cent. Casino groups Star and Crown advanced 3.74 and 2.46 per cent, respectively.
The heavyweight miners shrugged off another dip in iron ore. Rio Tinto put on 1.97 per cent, Fortescue Metals 1.15 per cent, Newcrest 2.01 per cent and BHP 1.3 per cent.
A return to profit lifted PNG-focused Oil Search 1.62 per cent. The energy giant swung to a first-half profit of $139 million from a net loss of $266.2 million over the same period last year when crude prices were crashing. The company is in negotiations with Santos to form one of the largest energy firms in the world.
Westfield mall operator Scentre Group rose 5.1 per cent on news of a rebound in rent collection as foot traffic improved. The company collected $1.2 billion gross rent over the first six months of the year, up 37 per cent from the first half of last year. Investors will receive a distribution of seven cents per security after half-year operating profit rose to $460.1 million.
A 21 per cent increase in interim dividend to 3.4 US cents helped lift Alumina 3.18 per cent. The aluminium refiner reported a half-year net profit of US$73.6 million following six months of record bauxite and alumina output.
Aged care provider Estia Health reinstated its dividend after eking out a $6 million full-year net profit following “one of the most challenging periods the sector has ever faced”. Government funding and grants helped cushion the impact of Covid costs. The share price rose 2.23 per cent.
Among other companies reporting, Spark Infrastructure put on 0.35 per cent, Monash IVF 3.14 per cent, HUB24 6.01 per cent, Uniti 7.89 per cent, Pepper Money 3.85 per cent, Viva Energy 0.89 per cent and Nanosonics 20.88 per cent
Western Areas declined 1.9 per cent, McMillan Shakespeare 5.72 per cent, Austal 11.35 per cent and Perenti Global 7.89 per cent.
Going down
An 86.5 per cent dive in full-year net profit to $3.5 million pulled Kogan down 14.28 per cent. The result reflected increased costs due to supply chain interruptions, over-stocking and marketing to shift excess inventory. Gross profit improved 61 per cent to $203.7 million and revenue by 56.8 per cent to $780.7 million.
Ansell sank 9.49 per cent as increasing costs and the threat of supply disruptions overshadowed record sales and a 48.5 per cent jump in full-year profit. The personal protective equipment manufacturer’s capital expenditure increased 36.5 per cent to $82.7 million to meet a Covid-fuelled jump in demand. The company expects demand for gloves and chemical body protection to soften this financial year.
“Increased COVID-19 cases in South East Asia in the recent months may disrupt supply,” the company warned. “A number of Ansell’s factories and suppliers in the region have had short term closures or reduced operations. This may impact sales during FY22 H1. Increased freight costs and shipping delays are also expected to persist throughout FY22.”
Takeover target Boral fell 5.62 per cent after warning lockdowns were impacting costs and volumes. The construction materials supplier said the Greater Sydney lockdown threatened to cost $50 million in lost earnings in the first quarter alone. The company declared a full-year statutory net profit of $640 million.
Monadelphous sagged 14.42 per cent after a profit miss as the engineering group struggles to find skilled workers. The firm declared a full-year net profit of $47.1 million, short of the $55 million consensus. International border closures and strong demand have squeezed labour markets.
“The impacts are particularly acute for fly-in fly-out construction work in the resources and energy sectors where restrictions in the mobility of personnel due to unpredictable interstate border restrictions are impeding labour mobilisation and impacting operational productivity,” the company said.
Online jobs marketplace Seek reinstated its full-year dividend after returning to profit. The company reported a net profit of $140.8 million, versus a loss of $88.9 million in FY20. Shareholders will receive a final dividend of 20 cents per share. The share price dipped 0.08 per cent.
Other markets
A second day of solid gains on Asian markets lifted US futures. The Asia Dow climbed 1.12 per cent, China’s Shanghai Composite 0.74 per cent, Hong Kong’s Hang Seng 1.41 per cent and Japan’s Nikkei 1 per cent.
S&P 500 futures rose eight points or 0.18 per cent.
Oil added to a 5.5 per cent overnight rebound. Brent crude climbed 41 US cents or 0.6 per cent to US$69.16 a barrel.
Gold retreated US$2.20 or 0.12 per cent to US$1,804.10 an ounce.
The dollar firmed above 72 US cents, inching up 0.07 per cent 72.14 to US cents.
