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A wave of optimism about easing border restrictions helped lift the share market off three-month lows following strong gains on Wall Street.
The S&P/ASX 200 bounced 92 points or 1.6 per cent as traders piled into companies most exposed to a recovery in the national economy.
The consumer discretionary sector was a sea of green, with everything from travel agents to casinos and retailers on the rise after South Australia and Queensland relaxed border restrictions, and the closely-watched 14-day average of new coronavirus cases in Victoria dropped below 30.
What’s driving the market
Consumer stocks surged amid signs the country was getting on top of the latest Covid-19 wave. Victoria this morning announced 15 new cases, pulling the 14-day average down to 29.4. Premier Dan Andrews said falling numbers meant restrictions will ease further than originally scheduled this weekend. New South Wales had zero community transmissions for a second day. Elsewhere, South Australian reopened its borders to NSW and Queensland relaxed restrictions for 41 NSW postcodes near the border.
The consumer discretionary sector jumped 2.6 per cent as 19 of the top 20 listed companies rallied. Wesfarmers jumped 2.5 per cent, Aristocrat Leisure 4.1 per cent, Tabcorp 2.9 per cent and Domino’s Pizza 3.1 per cent. Among travel and tourism stocks, Flight Centre gained 5.3 per cent, Qantas 2.7 per cent, Webjet 2.2 per cent and Sydney Airport 2.7 per cent. Retailers Harvey Norman, Woolworths and Super Retail Group all gained at least 2 per cent.
Tech stocks were boosted by signs US investors were “buying the dip” after the Nasdaq’s recent technical correction. The Nasdaq jumped 1.71 per cent overnight, outpacing gains of 1.05 per cent for the S&P 500 and 0.52 per cent for the Dow Jones Industrial Average. Here, Afterpay climbed 3.6 per cent, Megaport 3.2 per cent, Nextdc 3.2 per cent and Appen 3.1 per cent.
Going up
All 11 sectors advanced. The S&P/ASX 20 index of market heavyweights saw gains ranging from 0.2 per cent for Telstra to 4.1 per cent for Aristocrat Leisure. The big four banks each put on between 1.5 and 2.1 per cent. Newcrest was the best of the miners, rising 2.2 per cent, ahead of Fortescue +1 per cent, BHP +0.9 per cent and Rio Tinto +0.6 per cent.
Agribusiness Nufarm climbed 7.7 per cent after the company foreshadowed a return to profitability as headwinds eased in the second half of the last financial year. The business reported a statutory full-year net loss of $456 million, but saw earnings rebound in the second half in Australia, New Zealand, North America and Asia.
Telecommunications networks builder Service Stream surged 12.6 per cent after the federal government announced a $3.5 billion upgrade to the National Broadband Network. Telstra edged up 0.2 per cent.
Going down
The biggest losers on the index were mostly gold stocks. Ramelius Resources slid 3.9 per cent, Resolute Mining 1.4 per cent and Westgold Resources 0.6 per cent.
Outdoor activities retailer Kathmandu pared sharp initial losses as investors anticipated a recovery in sales as consumer spending improves. The share price fell as low as $1.08 before trimming its fall to 3.6 per cent at $1.13 after the company reported an 84.6 per cent dive in full-year net profit to $8.88 million
Reece Pharmaceuticals sank 4 per cent to $1.57 after raising $27.95 million at $1.30 a share from institutional and sophisticated investors to fund clinical trials for the company’s pipeline of anti-infective drugs.
Other markets
Asian markets surrendered early gains. China’s Shanghai Composite dipped 0.1 per cent, Hong Kong’s Hang Seng 0.2 per cent and Japan’s Nikkei 0.6 per cent.
US index futures were mixed. S&P 500 index futures declined three points or 0.1 per cent. Dow futures rose 65 points or more than 0.2 per cent.
Oil erased its overnight gains and then some. Brent crude dropped 47 cents or 1.1 per cent to $US41.25 a barrel. Gold eased $2 or 0.1 per cent to $US1,905.60 an ounce.
The dollar fell 0.6 per cent to 71.28 US cents.
What’s hot today and what’s not
Hot today: With gas in the headlines this week, shares in State Gas (ASX:GAS) briefly doubled in value after the junior explorer announced it had won new permits, creating a “super gas region” in central Queensland. The company was appointed Preferred Tendered for the latest Queensland government land release next to the company’s existing block. State Gas aims to develop the Reid’s Dome Gas Project to service the east coast domestic market. The share price shot from 57 cents to $1.19 before easing to 77 cents and a gain of 35.1 per cent.
Not today: Retail shareholders in Bounty Oil & Gas (ASX:BUY) have enjoyed stellar gains this year, but groaned when the junior explorer announced a capital raising at a thumping 63 per cent discount to yesterday’s closing price. Investors saw the value of their shares tumble 22.2 per cent from 2.7 cents yesterday to 2.1 cents today after the company placed 143 million shares at one cent for working capital and project development. Not surprisingly, the company received “strong support” from those shareholders and sophisticated investors fortunate enough to access the heavily-discounted raising.
