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The share market’s record-breaking run stretched into a fifth session before a mid-morning fade as US futures soured and New South Wales announced record Covid numbers.

The S&P/ASX 200 reached mid-session ten points or 0.13 per cent ahead at 7549 after earlier hitting a new high at 7576.3. The index has made fresh highs every day for a week.

Gains in Afterpay, CBA and Telstra kept the index above water, with support from Westpac and BHP. James Hardie and Megaport rallied after reporting earnings. Transurban, Fortescue Metals and CSL were the heaviest drags.

What’s driving the market

The market shed most of its gains after NSW reported the highest daily coronavirus tally of the current outbreak. Health authorities announced a record 356 new local cases and three deaths in the 24 hours to 8 pm last night. Victoria recorded 20 new cases and Queensland three cases.

“We are in a tough, tough fight with this Delta strain. A tough fight,” Prime Minister Scott Morrison said.

Also weighing on sentiment was the steady drip of deteriorating economic data. Consumer confidence fell last week as south-east Queensland and Victoria announced snap lockdowns. The ANZ-Roy Morgan weekly measure fell 3.1 points to 98.6, its lowest level since November.

“Australian consumers have moved into pessimistic territory for the first time since late last year. However, confidence is still well above the low seen during VIC’s 2nd lockdown and it rose in Sydney/NSW,” tweeted David Plank, ANZ Head of Australian Economics.

NAB’s monthly survey showed business confidence collapsed in July. The confidence index plunged to -8 from a June reading of +11. Business conditions remained positive at +11, but well down from the June reading of +25.

The Dow dipped 0.3 per cent overnight and S&P 500 eased 0.09 per cent as commodity prices responded to a Covid upsurge in China.

China has over recent weeks tightened restrictions and a number of banks have downgraded Chinese growth expectations over the past few days. Reflecting  movement restrictions, Chinese airlines have reported a reduction in seat capacity of 32% in the past week. Those concerns are weighing on commodity markets,” NAB’s Tapas Strickland, Director, Economics, said.

US futures faded as Asian markets turned mixed. S&P 500 futures dropped seven points or 0.16 per cent. China’s Shanghai Composite rolled over to a loss of 0.25 per cent. Hong Kong’s Hang Seng eased 0.02 per cent. The Asia Dow gained 0.24 per cent and Japan’s Nikkei 0.26 per cent.

Going up

Lithium miners were the index’s best performers as optimism over demand for the battery component lifted share prices to fresh heights. JPMorgan reportedly lifted its spodumene price target by 31 per cent this morning.  

Orocobre climbed 9.15 per cent. Pilbara Minerals rallied 9.52 per cent, Galaxy Resources 9.02 per cent and Mineral Resources 2.91 per cent.

Megaport climbed 3.66 per cent on news the network-as-a-service provider moved closer to profitability. The tech firm increased full-year revenues by 35 per cent to $78.28 million and grew its customer base by 24 per cent. The net loss for the year was $55 million. CEO Vincent English said the firm’s mission for the coming year was to “Scale up, scale out”.

A profit upgrade boosted James Hardie 4 per cent to an all-time high. The fiber cement specialist lifted its full-year guidance for adjusted net income to US$550 – US$590 million from previous guidance of US$520 – US$570 million. The upgrade followed a record quarter that included a 35 per cent increase in global net sales.

Annuities specialist Challenger gave up early gains to trade unchanged after increasing assets under management by 29 per cent and declaring a full-year statutory net profit of $592 million. The company lifted its full-year dividend by 14 per cent to 20 cents per share to reflect an improved capital position. The company also announced CEO and Managing Director Richard Howes will stand down. Howes will remain until March 2022 while a successor is found.

Beleaguered tech firm Nuix rose 2.29 per cent after outlining more details of ASIC’s investigation into potential contraventions of the Corporations Act. The company said the regulator was exploring Nuix’s pre-listing financial statements, prospectus and market disclosures. The firm said it was confident it had complied with its obligations.

Telstra rose 0.65 per cent to an 18-month high. Afterpay gained 3.03 per cent, Aristocrat Leisure 2.4 per cent, Woolworths 0.35 per cent and Coles 0.17 per cent..

A mixed morning for the banks and miners saw CBA climb 0.62 per cent, Westpac 0.39 per cent and BHP 0.46 per cent. NAB dipped 0.26 per cent, ANZ 0.55 per cent, Rio Tinto 0.1 per cent and Fortescue 0.53 per cent.

Going down

Gold stocks sagged for a second day following yesterday’s “flash crash”. The price of gold dived more than 5 per cent yesterday before paring its loss to 2.1 per cent.

Here, Ramelius fell 4.97 per cent to a four-month low. St Barbara shed 4.23 per cent, Westgold 3.89 per cent and Newcrest 0.12 per cent.

Airline Regional Express slid 0.42 per cent after downgrading its full-year outlook to reflect the hit from lockdowns. The airline slashed its full-year guidance from a statutory loss of $15 million to $18 million.

“The lockdowns that eventuated in New South Wales in June and the ensuing border closures have significantly impacted revenue,” the company said. “Rex will be implementing temporary stand downs within the Company after consultation with the stakeholders,” it added.

Coal miner Coronado declined 1.3 per cent as increases in half-year production and sales were offset by lower prices and negative currency movements. Revenues increased 12.1 per cent and sales volumes by 6.6 per cent. Adjusted earnings sank 26.4 per cent due to higher costs and freight charges. The half-year net loss was $96.1 million.

Toll road operator Transurban fell 3.14 per cent to a two-and-a-half-month low after warning yesterday about the earnings impact of lockdowns.

Other markets

Gold rebounded from yesterday’s “flash crash”. In electronic trade, the yellow metal bounced US$9.20 or 0.53 per cent to US$1,735.70 an ounce.

Brent crude eased seven US cents or 0.1 per cent to US$68.97 a barrel.

The dollar retreated 0.1 per cent to 73.22 US cents.

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