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Aussie shares rose for a second day ahead of a lunchtime economic update from China as gains in consumer and healthcare stocks offset declines in banks.

The S&P/ASX 200 built on Friday’s 61-point surge with a rise of 27 points or 0.36 per cent to 7470. The rally preceded a monthly data dump expected to confirm decelerating growth in the nation’s biggest trading partner.

Fortescue Metals, Woodside Petroleum and CSL were the pick of the heavyweight advances. BHP and some of the banks declined.

What’s driving the market

The ASX 200 reached mid-session on the verge of breaking technical resistance at the 7470-7480 level at the third attempt. The index first approached this level in the last week of October, then again last week. A breakout this afternoon would clear the way for a crack at the 7500 level for the first time in more than two months.

Ten of eleven sectors advanced, led by healthcare, consumer discretionary and I.T. The financial sector eased 0.3 per cent.

Lenders declined as a rebound in long-term interest rates faltered. The yield on ten-year Australian government bonds dipped three basis points to 1.776 per cent. Yields rallied last week after inflation data in the US and China underlined pricing pressures.

“The inflation debate is still the hottest ticket in town,” Chris Weston, head of  research at Pepperstone, said. “It is promoting higher volatility (vol) in rates markets and bonds, with a small pick-up seen in FX volatility.

“Equity markets are still, however, calm, with the VIX at 16.3% with falling demand to hedge potential drawdown. This divergence in implied vol across asset classes remains a key talking point, but there is no doubt that the boat is not yet tipping with correlations among stocks almost at zero, and cyclical sectors (of the S&P500) still holding up well vs defensives.”

The S&P 500 rallied 0.72 per cent on Friday. Despite the advance, the US benchmark finished 0.3 per cent lower for a week dominated by inflation worries. The weekly decline was the index’s first in six weeks.

Going up

Incitec Pivot rose 4.81 per cent to a two-year high on news a strong second half helped the explosives and fertiliser manufacturer almost double full-year net profit after tax to $359 million from $188 million in FY20. Earnings per share climbed 70 per cent to 18.5 cents per share.

Mesoblast jumped 13.53 per cent after an advanced trial showed its treatment for chronic heart failure helped reduce deaths, heart attacks and strokes. Rexlemestrocel-L was particularly effective in treating patients with high levels of inflammation, according to results from the randomised, controlled Phase 3 trial.

Woodside Petroleum firmed 1.57 per cent on the sale of a 49 per cent stake in its Pluto Train 2 joint venture in WA. Global Infrastructure Partners will help fund the construction of a new LNG train and gas facilities at the Scarborough development.

Fortescue Metals climbed 1.78 per cent towards a third straight gain as investors continued to support the iron ore miner’s pivot towards green energy. Rio Tinto faded 0.1 per cent and BHP 0.77 per cent.

Other heavyweight movers included CSL +1.19 per cent, Wesfarmers +1.13 per cent, Goodman +1.01 per cent and Westpac +0.77 per cent. ResMed added 4.67 per cent, Fisher & Paykel 2.05 per cent and Clinuvel 1.86 per cent.

Going down

Cimic said it expects to book $30 million after costs from the initial public offering of its jointly owned infrastructure services group, Ventia. The IPO values Ventia at approximately $1.45 billion. Cimic also expects a pre-tax gain of around $60 million. Shares in the construction firm eased 0.98 per cent.  

A 38 per cent increase in underlying earnings failed to keep Elders in positive territory. Shares in the agribusiness slid 1.82 per cent after reporting underlying profit increased by 40 per cent to $151.1 million. The company foresaw favourable seasonal conditions and high demand this half creating “excellent trading conditions”.  

Link Administration eased 0.41 per cent to $4.76 after announcing it will open its books on a non-exclusive basis to prospective suitor Carlyle Asia. The investment fund pitched a conditional, non-binding indicative offer valuing Link shares at around $5.38. Link received a separate offer last week for its banking and credit management business.

NAB dropped 2.08 per cent as its shares traded ex-dividend. Also in retreat, CBA gave up 0.34 per cent, ANZ 0.21 per cent and Afterpay 0.84 per cent.

Other drags this morning included Seven West Media -3.68 per cent, Ampol -2.69 per cent and Platinum Asset Management -1.68 per cent.

Other markets

Asian markets rallied ahead of factory and retail data from China. The Asia Dow firmed 0.63 per cent, Hong Kong’s Hang Seng 0.28 per cent, Japan’s Nikkei 0.49 per cent and China’s Shanghai Composite 0.06 per cent.

US futures edged higher. S&P 500 futures climbed almost six points or 0.12 per cent.

Oil started the week on the back foot. Brent crude fell 52 US cents or 0.63 per cent to US$81.63 a barrel.

Gold faded US$5.10 or 0.27 per cent to US$1,863.40 an ounce following seven days of gains.

The dollar wallowed near one-month lows, up 0.02 per cent at 73.33 US cents.

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