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Aussie shares rallied for a fifth session as July’s momentum continued into a new month.
The S&P/ASX 200 climbed 26 points or 0.37 per cent to a fresh seven-week high. The benchmark rose to within 25 points of the 7000 level for the first time since June 10.
Advances in utilities, energy producers and healthcare providers outweighed declines in some of the major miners and banks.
What’s driving the market
The ASX 200 continued last week’s winning streak ahead of a Reserve Bank meeting tomorrow that is expected to see official rates increase by at least 50 basis points.
However, gains fell short of pre-market indications as weak Sunday-night US equity futures sapped buying appetite. S&P 500 futures fell 14 points or 0.34 per cent ahead of another busy week of corporate earnings.
The decline took some of the shine off Friday’s 1.42 per cent bounce in the US benchmark. US stocks wrapped up their best month since November 2020 with a third day of gains.
“We are seeing a relief rally in the stock market, as pessimism reached extreme levels, and as longer-term interest rates have been coming back down,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said.
Also weighing on buying interest were signs inflationary pressures remained elevated. The Melbourne Institute’s July inflation gauge jumped 1.2 per cent last month and was 5.4 per cent higher than the same time last year. Core inflation increased 0.9 per cent.
“The results suggest ongoing, broad-based inflationary pressure with higher prices observed for a wide range of goods and services, including utilities, rents, housing construction, food and insurance,” the Institute’s Associate Professor Sam Tsiaplias said.
Going up
Lithium miners topped the index. Lake Resources rallied 6.79 per cent. Allkem gained 4.88 per cent. Further down the list, Core Lithium firmed 1.3 per cent after reporting “outstanding” drilling results.
A strong final quarter boosted Deterra Royalties by 3.01 per cent. The company reported royalty receipts of $113.1 million for the June quarter, almost twice the $59.2 million generated during the March quarter. Total receipts for FY22 were $265.2 million.
Utilities and healthcare were among the morning’s strongest sectors. Sonic Healthcare tacked on 2.6 per cent, Cochlear 1.25 per cent, APA Group 1.5 per cent and Origin Energy 1.01 per cent.
Woodside Energy +1.88 per cent and Telstra +1.67 per cent were the best of the heavyweights. Woolworths firmed 1.24 per cent. BHP added 1.12 per cent and Santos 0.82 per cent.
Shares in Plexure Group briefly doubled after the ASX-listed Kiwi software firm reported a return to profit and a new five-year deal with McDonald’s. Plexure will supply its customer engagement platform to the fast-food giant on improved terms for another five years.
The firm expects to report a full-year profit of NZ$3.7 million, versus an adjusted earnings loss of NZ$13.1 million for the previous fiscal year. The share price flew from 17 cents to 34 cents before paring its rise to 70.59 per cent.
Westpac edged up 0.14 per cent after completing the sale of its lift insurance business to TAL Dai-Ichi Life Australia. The sale concludes the bank’s exit from insurance underwriting.
Renewable energy specialist Genex Power was steady after rejecting a takeover offer. Genex said an indicative proposal from Skip Essential Infrastructure Fund and Stonepeak Partners at 23 cents per share undervalued the business and was not in the best interest of shareholders.
Lithium junior Ioneer was unchanged after securing a five-year binding offtake agreement with Prime Planet Energy & Solutions in the US. Ioneer will supply 4,000 tonnes of lithium carbonate per year from its Nevada operation.
Going down
Aussie Broadband dived 17.36 per cent after reporting a slowdown in customer growth last quarter. Total broadband services increased 7 per cent last quarter, versus an 11 per cent increase in Q3. Year-on-year growth of 46 per cent pushed full-year earnings towards the top end of guidance of $38-$39 million.
A poor North American barley crop, rising energy costs and supply-chain disruptions prompted an earnings downgrade at United Malt. The world’s fourth-largest maltster fell 13.35 per cent after cutting its full-year underlying earnings guidance for FY22 to $100-$108 million. Earnings are expected to rebound this financial year to $140-$160 million.
Growth stocks weighed after out-performing last month. Megaport sank 10.53 per cent, PointsBet 8.18 per cent and Zip Co 6.17 per cent.
Other markets
A mixed session in Asia saw the Asia Dow advance 0.24 per cent and Japan’s Nikkei gain 0.44 per cent. China’s Shanghai Composite shed 0.24 per cent. Hong Kong’s Hang Seng lost 0.88 per cent.
Oil retreated with US equity futures. The new front-month Brent crude contract dropped 98 US cents or 0.9 per cent to US$102.99 a barrel.
Gold dipped 40 US cents or 0.03 per cent to US$1,781.40 an ounce.
The dollar climbed 0.42 per cent to 70 US cents.
