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A rebound in energy stocks helped the ASX rise for the third time in four sessions after Saudi Arabia dismissed speculation about an increase in oil production next month.
The S&P/ASX 200 rallied 40 points or 0.56 per cent to 7179 by mid-session. A close around that level would be the benchmark’s strongest since June.
Energy producers led after Brent crude bounced off a ten-month low. The major miners and most of the banks also rose. Ten of eleven sectors rallied. Industrials logged the only decline.
What’s driving the market
The ASX took in its stride soft leads from Wall Street and commodity markets, with investors seemingly eager to move on from yesterday’s China Covid scare. US stocks fell overnight as fresh restrictions in Beijing and other major cities undermined the outlook for global growth.
The S&P 500 dropped 0.39 per cent. The Nasdaq Composite shed a chunkier 1.09 per cent.
“The main themes in Monday’s APAC session – rising covid infection rate in China and related lockdowns/stay at home orders – continue to reverberate, seeing US stocks weaker… and AUD one of the weakest G10 currency performers,” Ray Attrill, NAB’s head of FX strategy, said.
The Australian market dropped 0.17 per cent yesterday in response to the China news. Buyers returned this session as Asian markets and iron ore steadied and crude rebounded.
The Asia Dow rallied 0.71 per cent. Japan’s Nikkei gained 0.85 per cent. China’s Shanghai Composite dipped 0.03 per cent, Hong Kong’s Hang Seng shed 0.17 per cent.
Oil reversed a heavy initial fall after a report suggesting the Organization of the Petroleum Exporting Countries might increase production next month was flatly denied. The Wall Street Journal said the cartel might raise output to rebuild frayed relations with the White House. Saudi Arabia’s energy minister flatly denied any discussion of a production hike.
“It is well-known that OPEC+ does not discuss any decisions ahead of the meeting,” Prince Abdulaziz bin Salman said.
Brent crude plunged as low as US$82.31 before recouping almost all of its losses. The international benchmark was this morning 48 US cents or 0.55 per cent ahead at US$87.93 a barrel. Iron ore was unchanged on the Dalian Commodity Exchange.
In domestic economic news, consumer confidence improved modestly for a second week while remaining firmly in negative territory. The ANZ-Roy Morgan confidence index rose 1 per cent to 81.6, well below the long-term monthly average of 111.9.
“Despite the consecutive gains, sentiment remains close to levels last seen during the early weeks of the COVID lockdowns,” ANZ Head of Australian Economics, David Plank, said.
Going up
Woodside Energy rallied for the first time in four sessions, bouncing 2.34 per cent as crude prices recovered. Santos put on 1.44 per cent. Beach Energy nudged up 0.74 per cent.
Coal miners were among the morning’s best performers following a 3.66 per cent rise in the price of coal out of Newcastle. Whitehaven climbed 8.11 per cent. New Hope tacked on 7.43 per cent
BHP and Rio Tinto steadied after yesterday’s falls. BHP firmed 1.12 per cent. Rio added 0.66 per cent. Fortescue Metals eased 0.21 per cent ahead of today’s AGM.
A record full-year profit lifted Technology One 4.17 per cent to an 11-month high. The enterprise software maker said it has reported record profits and revenues for 13 consecutive years, underlining the strength of its business model.
After-tax profit lifted 22 per cent to $88.8 million. Annual recurring revenues increased by 25 per cent.
Brickworks edged up 0.24 per cent as a warning about increasing headwinds took some of the shine off a record underlying full-year profit. Underlying net profit jumped 159 per cent in FY22 to $746 million. However, Managing Director Lindsay Partridge anticipates “increasing headwinds in the second half, as the existing pipeline of construction work is built out”.
A 43 per cent improvement in full-year profit catapulted ASX-listed UK banking group Virgin Money up 13.69 per cent. The lender announced it will buy back an additional £50 million worth of shares and pay a dividend of 7.5 pence per share.
BlueScope Steel rallied 2.72 per cent after reaffirming previous guidance at today’s AGM. The group expects first-half underlying earnings of $800-$900 million.
Going down
Bravura Solutions fell 3.03 per cent after warning it faces a “difficult and transitory year”. Shares in the management software maker have tumbled from $2.70 a year ago to below 80 cents this morning. New CEO Libby Roy told today’s AGM this year’s earnings will be “materially below last year”.
Bapcor dropped 2.41 per cent on news of a temporary squeeze on margins as price increases lag rises in inflation, labour costs and freight. The automotive after-care group said it continued to see positive revenue growth.
Tracking app-maker Life360 slipped 5.2 per cent to $6.38 after raising $50 million from institutional investors at $6.30.
Discount retailer Best & Less slumped 11.4 per cent on news sales growth moderated after a strong start to the fiscal year. The firm said it would need a significant increase in sales growth to match last year’s result.
Other markets
US futures recovered from last night’s slide. S&P 500 futures bounced eight points or 0.2 per cent.
Gold recouped more than a third of last night’s loss, rising US$5.80 or 0.34 per cent to US$1,745.50 an ounce.
The dollar rebounded 0.23 per cent to 66.23 US cents after falling more than 1 per cent overnight.
