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The share market firmed on the last session of the month as gains in tech stocks and bond proxies outweighed declines in most of the major banks and miners.

The S&P/ASX 200 climbed 26 points or 0.35 per cent towards a second straight advance.

At the halfway mark, the index was on track for a monthly tally of 138 points or almost 1.9 per cent. The market has risen for 11 straight months, and 16 of the 17 months since the initial pandemic market crash.

Afterpay, Goodman and CSL advanced. Woodside, BHP and most of the banks declined. Biotech Mesoblast fell almost 13 per cent following another regulatory delay.

What’s driving the market

Growth stocks and assets that compete with bonds for investment flows rallied as markets adjusted to the prospect of low-rates-for-longer following a speech by Federal Reserve Chair Jerome Powell on Friday. Powell lit a fuse under stocks and sent yields lower after clarifying that any reduction in the central bank’s bond buying program this year would not trigger official rates. The yield on ten-year Australian government bonds fell more than two basis points this morning.

“The explicit de‑linking of tapering to rate rises has allowed equity markets to rally, while yields have moved lower. The S&P 500 rose 0.4% overnight and is up 1.3% since Jackson Hole on Friday. Technology stocks led the rally in US equities overnight,” NAB Director, Economics, Tapas Strickland, said.

The S&P 500 and Nasdaq Composite closed at all-time highs as gains in Big Tech offset weakness in banks and other lenders that see margins contract when lending rates decline. The pattern was similar here: I.T. up 1.8 per cent, its first rise in four sessions; financials down 0.11 per cent. The energy and utilities sectors also softened.

The ASX was an outlier during a negative session on Asian markets. The Shanghai Composite fell 0.33 per cent after data showed a slowdown in Chinese factory activity growth and a contraction in the services sector.

The Chinese non-manufacturing PMI fell to 47.5, its lowest since the February 2020 contraction. The manufacturing PMI dipped more than expected to 50.1 from 50.4 in July.

The Asia Dow slid 0.42 per cent, Hong Kong’s Hang Seng 1.29 per cent and Japan’s Nikkei 0.2 per cent.

Going up

A 6.87 per cent rebound in Appen helped lift the tech sector. WiseTech put on 5.31 per cent, Nextdc 3.99 per cent and Afterpay 1.87 per cent.

Outside of the tech space, bond proxies offered the best returns of the index heavyweights. Goodman Group rose 1.77 per cent, Coles, 1.24 per cent, CSL 1.36 per cent and Transurban 0.92 per cent.  

Net profit at nickel and lithium miner IGO soared 254 per cent to $549 million during a “transformational year”. Nickel production at the miner’s flagship Nova mine exceeded guidance. The company sold its Tropicana gold mine during the year and launched a lithium joint venture with Tianqi. The share price edged up 1.26 per cent.

Regis Healthcare firmed 7.61 per cent after returning to profit. The aged care provider swung from a full-year loss of $0.7 million in FY20 to a profit of $19.9 million last year as occupancy rates improved.

Webjet rallied 3.55 per on news it expects to be cashflow positive this half as its US and European businesses recover. The company said its WebBeds business-to-business operation had been profitable since July.

“We have seen strong demand as travel restrictions ease in North America and Europe, suggesting significant upside as more international markets reopen,” the company said.

The Market Herald, publisher of this website and owner of the HotCopper forum, increased full-year revenue 91 per cent to $23 million. Before-tax profit surged to $13.1 million from $722,348 in FY20. Cash receipts increased 80 per cent to $21.9 million. The share price rallied 7.69 per cent to a six-month peak.

Going down

Biotech Mesoblast sank 12.88 per cent as its regulatory struggles in the US continued. The US Food & Drug Administration advised the company it needs another clinical study before its lead product could be approved for emergency use for treating Covid-19 ARDS (acute respiratory distress syndrome). The company declared a full-year loss of $98.8 million after spending $53 million on research and development.

Harvey Norman retreated 3.24 per cent after reporting a lockdown-fuelled downturn in sales and returning $6 million in JobKeeper payments. The retailer increased half-year earnings by more than half a billion dollars to $1.457 billion, but warned rolling lockdowns had affected sales over the last two months. The company expects pent-up demand to boost sales when economies reopen.  

PointsBet retreated 1.27 per cent after increased spending on marketing helped push its loss for the year out to $164.3 million. The wagering group more than doubled revenues to $194.7 million. Gross profit also more than doubled to $87.6 million. The company has been spending to expand its presence in the US. Marketing expenses in the US rose to $119.2 million.

A 27 per cent decline in full-year profit helped push Regis Resources down 2.34 per cent. Higher revenues from gold sales were offset by increased mining costs, as well as depreciation and amortisation charges.

Buy now pay later player Splitit eased 1.11 per cent to a 14-month low as news of a 94 per cent improvement in half-year merchant sales volumes was offset by the departure of CEO Brad Peterson. Veteran retail sales executive John Harper will act as interim CEO until a permanent replacement is found. The half-year loss blew out to US$18.77 million from roughly $9 million over the prior corresponding period.

Among other companies reporting, Shaver Shop rose 4.9 per cent and Bubs fell 2.38 per cent.

Worley dropped 3.03 per cent as it traded without the right to a dividend. Link Administration was flat.

Other markets

US futures held steady in the face of Asian declines. S&P 500 futures were recently ahead one point or 0.03 per cent.

Oil retreated following last week’s double-digit rally. Brent crude eased 44 US cents or 0.61 per cent to US$71.79 a barrel.

Gold firmed US$3.40 or 0.19 per cent to US$1,815.60 an ounce.

The dollar was steady at 72.91 US cents.

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