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The share market took its time to get out of first gear this morning as investors waited to see if global markets have fuel left in the tank after last week’s breakneck rally.
The S&P/ASX 200 finally shook off its lethargy near mid-session, edging up 14 points or 0.2 per cent to keep alive hopes of a sixth straight advance. The benchmark index charged 5.4 per cent last week, delivering its best weekly return since April.
What’s driving the market
Markets often take a few days to digest major moves before settling on a new direction. Today brought a second day of consolidation following last week’s budget-driven surge back towards a technical resistance zone. Gains in technology and resource stocks were largely offset by weakness in energy, industrials and defensive sectors.
US stocks rose on Friday, but market sentiment here was kept in check by mildly negative US futures after resistance from both Democrats and Republicans over the weekend to the latest White House coronavirus relief proposal. S&P 500 index futures slipped six points or 0.2 per cent. On Friday. the index gained 0.88 per cent.
“There has only been a mild reaction to the weekend news that has dashed hopes of stimulus this side of the November election,” NAB Director of Economics Tapas Strickland said. “That suggests markets still have high hopes of a large scale stimulus package, and are indifferent about whether it occurs this side of November or not.”
The risk-sensitive Australian dollar slumped 0.3 per cent before recouping all of its losses, lately up 0.01 per cent at 72.25 per cent.
Going up
The market was kept in positive territory by gains in health giant CSL +0.5 per cent, iron ore miner Fortescue Metals +0.2 per cent, gold miner Newcrest + 2.7 per cent and the big four banks.
ANZ advanced 0.8 per cent, NAB 0.3 per cent and Westpac 0.4 per cent. Commonwealth Bank rose 0.4 per cent after announcing loan deferrals had fallen by more than a third from $67 billion in June to $42 billion last month.
Newcrest sparkled as a three-week high in gold boosted local miners. Evolution Mining climbed 4.5 per cent after announcing it produced 170,021 ounces of gold last quarter. Gold Road Resources gained 3.1 per cent, Resolute 2.8 per cent and Perseus 2.3 per cent.
Administration solutions provider Link Administration Holdings soared 22.3 per cent following a takeover offer from a consortium of private equity funds. Shares climbed from $3.99 on Friday to $4.88 this morning, below the offer price of $5.20.
Fintech Bravura Solutions jumped 7.5 per cent on news it will acquire UK software company Delta Financial Systems for $41.5 million. CEO Tony Klim said the businesses have “complementary products that together, provide a compelling offering to support the mission-critical operations of wealth management firms in the UK.”
Going down
Energy stocks, industrials and utilities were the biggest drags on the index. Woodside Petroleum retreated 0.7 per cent after oil’s bull run petered out at the end of last week. Oil Search sank 2.1 per cent and Santos 1.5 per cent. Origin Energy shed 1.6 per cent despite announcing two new independent directors in Coca-Cola Amatil Chair Ilana Atlas and Warehouse Group Chair Joan Withers.
News that explosives manufacturer Orica will close three plants in north America and rationalise other manufacturing facilities helped send the share price down 3.1 per cent. The closures will cost the company around $80 million.
Crown Resorts faced a new headwind after the Victorian regulator sent the beleaguered gaming group a Show Cause Notice asking why disciplinary action should not be taken over alleged non-compliance with the Casino Control Act. Crown’s share price dipped 2 per cent.
Other markets
A mixed morning on Asian markets saw China’s Shanghai Composite and Hong Kong’s Hang Seng both rise 0.5 per cent, while Japan’s Nikkei fell 0.4 per cent.
Oil extended Friday’s retreat. Brent crude dropped 38 cents or 0.9 per cent to $US42.48 a barrel. Gold rose $8.10 or 0.4 per cent to $US1,934.30 an ounce.
What’s hot today and what’s not:
Hot today: Patience was rewarded for investors in Azure Minerals (ASX:AZS) when the share price surged to its highest price in almost three years this morning. The base metals explorer announced the first drillhole at its Andover Project in WA’s West Pilbara region had intersected massive nickel-copper sulphides. Managing Director Tony Rovira said, “This strongly mineralised nickel and copper sulphide intersection from our first drill hole is an outstanding result and a great start to our maiden drilling program at Andover.” The share price bolted from 23.5 cents to 44 cents before paring its advance to 53.2 per cent at 36 cents.
Not today: Medicinal cannabis grower Cann Group (ASX:CAN) hit a ten-month low on news major shareholder and one-time potential suitor Aurora had sold its holding in the Australian company. Shareholder dreams of a lucrative takeover offer from the Canadian producer ended when Aurora sold its 11.84 per cent shareholding to “a small number of undisclosed buyers” over the weekend. Cann’s share price fell as low as 37.5 cents before trimming its fall to 6 per cent at 39.5 cents.
