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The share market scored a fifth straight record high before fading as gains in growth stocks and bond proxies were outweighed by declines in miners and some banks.
The S&P/ASX 200 hit a fresh intraday peak of 7315.6 before easing 11 points or 0.16 per cent to 7271 mid-session.
Afterpay, CSL and Brambles led the initial advance. CBA, ANZ and the big three iron ore producers declined.
What’s driving the market
Australian investors found the positives in a mixed set of overnight leads. Growth stocks outperformed in a two-speed US market, rising 0.3 per cent as value stocks declined by roughly the same percentage. In the major indices, that dynamic was reflected in a 0.49 per cent gain for the Nasdaq Composite and a 0.36 per cent drop in the Dow. The S&P 500 finished in the middle, down 0.08 per cent.
“It’s only Tuesday, but with no real follow-through to Friday’s post-US payrolls fireworks, it’s hard to avoid the sense the global markets are for the most part now simply lurching from one big event risk to the next with not a lot to see in-between. That next big event risk of course being Thursday’s US CPI [consumer price index] figures,” NAB Head of FX Strategy Ray Attrill said.
The tug of war between growth and value stocks has been one of the defining features of this trading year as investors debate whether a spike in inflation – bad for growth – is transitory or here to stay. Soft US jobs data on Friday placed growth back in the ascendancy. Bond yields tumbled, tech stocks surged.
Tech stocks and traditional alternatives to government bonds outperformed here for a second day. The I.T. sector climbed 0.89 per cent, real estate investment trusts 0.56 per cent and healthcare 0.54 per cent.
Travel and tourism stocks regained some of yesterday’s losses following brighter Covid-19 numbers from Victoria. The state recorded just two new locally-acquired cases yesterday, down from 11 the previous day.
Webjet bounced 1.59 per cent, Flight Centre 1.45 per cent, Qantas 1.26 per cent and Corporate Travel Management 0.43 per cent.
The lockdown helped clip 0.6 per cent off this week’s consumer confidence data. The ANZ/Roy Morgan index eased to 110.7 from 111.4 the week before.
Business conditions continued to improve, but confidence slipped last month from elevated levels. The conditions index hit a record +37. Confidence dipped three points to +20.
“The ongoing strength in conditions is promising – as it suggests the economy has continued to grow after recovering its pre-COVID level in Q1. The ongoing strength across all industries reflects those that are still recovering but also other sectors such as construction and manufacturing which have moved into a new growth phase” NAB Group Chief Economist Alan Oster said.
Going up
WiseTech led the tech advance, rising 5.06 per cent. EML Payments gained 4.74 per cent, Nearmap 3.84 per cent and Afterpay 0.66 per cent.
In the REIT space, Vicinity Centres climbed 2.13 per cent, GPT Group 1.69 per cent and Scentre Group 1.61 per cent. Goodman Group, which hit a post-GFC high yesterday, faded 0.83 per cent.
Industrials gathered strength mid-morning. Brambles advanced 0.82 per cent, Transurban 0.73 per cent and Seven Group Holdings 0.68 per cent.
A rebound in gold kept the sub-sector buoyant. Perseus rose 1.86 per cent, Ramelius 1.79 per cent and Newcrest 0.36 per cent.
Carsales.com rose 1.24 per cent after institutional investors snapped up a shortfall in a retail offer to raise funds to buy a 49 per cent stake in the Trader Interactive digital marketing company. Institutional and retail offers together raised around $600 million.
Going down
A second straight setback for iron ore plus a dip in copper helped send BHP down 0.96 per cent. Rio Tinto eased 0.7 per cent and Fortescue Metals 0.75 per cent.
CBA slipped further from Friday’s record close, fading 1.13 per cent. ANZ dropped 0.45 per cent. NAB bounced 0.21 per cent and Westpac added 0.04 per cent.
Other drags on the index included Wesfarmers -0.95 per cent, Woodside -0.71 per cent and Woolworths -0.62 per cent.
Ansell retreated 0.87 per cent after announcing Neil Salmon will replace Magnus Nicolin as CEO and Managing Director. Mr Salmon is currently president of Ansell’s industrial business unit.
Aurizon dipped 0.53 per cent after reaffirming full-year earnings guidance. The rail freight operator expects to earn around $870 – $910 million as it targets new markets and supply chains as part of a global shift from coal.
Other markets
US futures trimmed gains as Asian markets turned negative The Asia Dow rolled over to a loss of 0.16 per cent. China’s Shanghai Composite faded 0.23 per cent, Hong Kong’s Hang Seng 0.14 per cent and Japan’s Nikkei 0.11 per cent. S&P 500 futures halved their advance to three points or 0.07 per cent.
Oil extended last night’s retreat from two-year highs. Brent crude fell 48 cents or 0.67 per cent to US$71.01 a barrel.
Gold regained US$1,900, edging up $1.50 or 0.08 per cent to US$1,900.30 an ounce.
The dollar dipped 0.11 per cent to 77.48 US cents.
