The share market was poised to end the week on a high note after upbeat retail sales news helped soothe concerns about the pace of the recovery.
The S&P/ASX 200 regained the 6000 level for the first time in more than a week, rising 66 points or 1.1 per cent to 6002 by mid-session. The index fell as low as 5720 earlier this week after the US Federal Reserve warned the recovery from pandemic lockdowns will be long and hard.
A finish around these levels would deliver a weekly return of roughly 145 points or 2.5 per cent. The market staged its biggest rally in ten weeks on Tuesday, rising 3.9 per cent after the Fed announced fresh support for financial markets.
Consumer stocks led the rally following well-received trading updates from retailers Nick Scali and Adairs. Nick Scali jumped 21.9 per cent after announcing a surge in custom since reopening its furniture showrooms. Pent-up demand saw sales orders increase 54 per cent during May and June from the same period last year. Linen retailer Adairs put on 12.4 per cent on news of a 92.6 per cent increase in online sales in the second half of the financial year.
Retail turnover rebounded by a record amount last month, according to preliminary figures released this morning by the Australian Bureau of Statistics. Sales surged 16.3 per cent, the biggest jump in the survey’s 38-year history. Turnover was 5.3 per cent higher than the same period last year.
Also helping sentiment was news the minimum wage will increase by $13 this year to $753.80 a week. Bargain-hunters swooped on consumer stocks a day after grim jobs data triggered a sell-off. Flight Centre climbed 7.2 per cent, Seven West Media 6.5 per cent, Collins Foods 5.3 per cent, Crown Resorts 5.3 per cent and Star Entertainment 3.7 per cent.
Estia Health was among the index’s best performers, bouncing 5.6 per cent as the selling pressure appeared to lift ahead of the aged care home operator’s eviction from the S&P/ASX 200 on Monday. Other companies facing the drop are HUB24, Jumbo Interactive, Mayne Pharma, Pilbara Minerals and Pinnacle Investment Management. Among those replacing them, Mesoblast put on 4.6 per cent, Megaport 2.6 per cent and Perseus Mining 0.2 per cent.
Among the market heavyweights of the S&P/ASX 20, Transurban gained 3.1 per cent, IAG 2.7 per cent and Goodman Group 2.3 per cent. Brambles sagged 1.3 per cent, Suncorp 1.2 per cent, BHP 0.7 per cent and Rio Tinto 0.7 per cent. The big four banks were mixed, with ANZ down 0.4 per cent and the other three up between 0.8 and 0.9 per cent.
US stocks finished near flat overnight after disappointing jobless claims data and an uptick in coronavirus infections dampened risk appetite. The S&P 500 edged up 0.06 per cent or less than two points. The Dow eased 40 points or 0.15 per cent. Index futures fluctuated this morning. Dow futures briefly rallied 100 points and were lately ahead 49 points or 0.2 per cent.
The mood here was brighter than in Asia, where Hong Kong’s Hang Seng eased 0.1 per cent, Japan’s Nikkei added 0.1 per cent and China’s Shanghai Composite rose 0.4 per cent.
Oil extended overnight gains built on news of an OPEC crackdown on member states enforcing production limits. Brent crude rose 31 cents or 0.8 per cent this morning to $US41.82 a barrel. Gold tacked on $3.30 or 0.2 per cent to $US1,734.40 an ounce.
The dollar edged up 0.03 per cent to 68.53 US cents.
What’s hot today and what’s not:
Hot today: Cardinal Resources (ASX:CDV) hit a two-and-a-half-year peak after the Africa-focussed gold miner announced a takeover offer from Shandong Gold. The share price ran 27.5 per cent from 46.5 cents yesterday to just below the offer price of 60 cents. Cardinal’s board of directors unanimously recommended the offer, which significantly trumps an indicative offer of 45.7 cents from Nord Gold back in March. Cardinal CEO Archie Koimtsidis said the offer was “an opportunity for shareholders to crystalise their investment in Cardinal at an attractive price”.
Not today: News of delays in developing a project execution plan sent shares in Clean TeQ (ASX:CLQ) to a ten-week low. The company revealed it had been unable to secure financing for its Sunrise nickel-cobalt project and was introducing a slew of cost-cutting measures while the search continued. Measures to preserve cash included standing down several work teams, a pay freeze, cutting director fees salaries for key managers. CEO Sam Riggall said the company remained committed to developing the project once funding was secured. The share price slumped 12.9 per cent to 15 cents.