Join our daily newsletter At The Bell to receive exclusive market insights
Gains in mining and tech stocks helped the share market push towards its first weekly advance in more than a month as Australians prepared to vote in a federal election.
The S&P/ASX 200 climbed 81 points or 1.15 per cent. The rally lifted the benchmark roughly 70 points into positive territory for the week.
Wesfarmers, Macquarie Group and mining heavyweights BHP, Newcrest and Fortescue Metals led the advance. Support came from Afterpay parent Block, Novonix and Life360. The energy sector lagged after Woodside shareholders voted to merge the company with BHP’s petroleum interests.
What’s driving the market
A buoyant ASX betrayed no misgivings ahead of tomorrow’s election. The market shrugged off soft leads from the US as the dollar and commodity prices reacted positively to news Shanghai started to reopen yesterday.
Iron ore, crude and metals rallied on expectations for a recovery in Chinese demand. The dollar – used by some overseas forex traders as a proxy for commodity strength – regained the 70 cents level.
Tech was an unexpected market leader as bargain-hunters took advantage of a sell-off that last week drove the sector to its lowest in two years.
“Tech shares were seen to be charging higher and taking a strong lead in the share market. It seems investors are busy snapping up beaten-down shares after heavy selling over the past few weeks. The recent market surrender and subsequent reversal in share prices appear to have tempted investors,” Kunal Sawhney, chief executive of research group Kalkine, said.
Today’s advance was more remarkable for its weak leads. The S&P 500 faded to a loss of 0.58 per cent overnight as sellers took advantage of early gains. The decline pushed the index to within 1.4 per cent of a bear market.
Australians go to the polls tomorrow with a choice between two major parties offering similar visions for the economy, according to City Index market analyst Tony Sycamore. That means a change of government carries less market risk than at previous elections.
“Unlike the 2019 election where the ALP’s Bill Shorten’s economic policies included controversial reforms to negative gearing, capital gains concession and the treatment of franking credits, this time around the economic policies of the major parties are similar,” Sycamore said.
“The lack of a polarising politician and economic policy in this race, means… that should Anthony Albanese become the 31st Prime Minister of Australia, the markets are unlikely to be too concerned.”
The greatest market risk would be a hung parliament, Sycamore believes.
“In return for their support, independents may insist on policies that are less market-friendly. Examples include the Greens’ economic policies of a 6% wealth tax on billionaires, and a Corporate Super–Profits Tax of 40%. In this event, expect the AUDUSD and the ASX200 to take a short-term hit when they re-open next Monday morning,” he said.
Going up
Shareholders in casino group Crown Resorts this morning voted in favour of an $8.9 billion takeover by US investment giant Blackstone. The vote clears the way for the acquisition to proceed if state regulators grant approval. Crown shares edged up 0.47 per cent.
Mydeal.com.au jumped 55.43 per cent after Woolworths launched a bid for a controlling interest in the online retail marketplace. The company entered a binding agreement for Woolworths to acquire an 80 per cent interest and delist the firm.
The offer price of $1.05 represented a 62.8 per cent premium to yesterday’s closing price. Woolworths shares edged up 0.65 per cent.
Other battered consumer staples heavyweights also recouped some of yesterday’s losses. Wesfarmers bounced 2.4 per cent. Coles added 0.45 per cent. Metcash gained 0.23 per cent.
Other majors to advance included Macquarie Group +2.26 per cent, Fortescue Metals +2.06 per cent, BHP +1.95 per cent and Newcrest +1.93 per cent.
IGO shareholders celebrated the first production of battery-grade lithium hydroxide at the firm’s Kwinana refinery by boosting the share price 5.41 per cent.
Final approval for a new round of drilling at Chalice Mining‘s flagship Julimar project lifted the miner’s share price 14.16 per cent. The company said drilling for green metals would commence shortly at high-priority targets at Hartog and Dampier.
Going down
Woodside Petroleum declined 3.61 per cent after shareholders voted to merge with BHP’s oil and gas interests. The merger is expected to complete on June 1.
BHP shareholders will receive shares in the “new Woodside”. The merged entity will trade under the name Woodside Energy Group with a new ticker code: WDS.
Johns Lyng Group slumped 3.54 per cent to a nine-month low on news two executive directors reduced their holdings. CEO and Managing Director Scott Didier and Executive Director and COO Lindsay Barber both sold a million shares to “manage their personal asset portfolios”.
The building services group reaffirmed earnings guidance but warned it was still assessing the financial impact of flooding on the east coast. The company’s share price has fallen by more than a third since last month.
AMP dropped 0.88 per cent after CEO Alexis George warned shareholders the investment manager had “much work to do” and was not in a position to resume dividend payments. George told today’s AGM the company was on track to reduce costs by $300 million across the business this financial year.
InvoCare eased 0.61 per cent on news the funeral homes operator faced headwinds last quarter from wet weather on the east coast, shipping delays and rising costs. However, today’s AGM also heard mortality rates were tracking back to long-term trends, increasing funeral volumes.
Westfield operator Unibail-Rodamco-Westfield slumped 10 per cent, mirroring similar moves in its European listings overnight. The decline followed heavy selling among consumer stocks in the US and news the shopping centre operator intends to launch the Westfield brand in Madrid, Stockholm and Warsaw.
Other markets
US equity futures rallied with Asian markets. The Asia Dow climbed 0.79 per cent, China’s Shanghai Composite 0.76 per cent, Hong Kong’s Hang Seng 1.82 per cent and Japan’s Nikkei 1.09 per cent.
S&P 500 futures rose 21.5 points or 0.55 per cent.
Oil and gold unwound some of their overnight gains as the US dollar rebounded. Brent crude declined US$1.24 or 1.1 per cent to US$110.80 a barrel.
Gold eased US$5.60 or 0.3 per cent to US$1,835.60 an ounce.
The dollar fell 0.37 per cent to 70.16 US cents.
