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The ASX 200 regained 6800 as gains in industrial companies and defensive sectors offset pressure on resource stocks after heavy rain impacted east coast production.
The S&P/ASX 200 climbed 40 points or 0.6 per cent to 6819, heading towards a second straight gain. The Australian benchmark has not managed back-to-back advances in almost two weeks.
Trade had an initially defensive flavour, with utilities and consumer staples setting the pace. Energy and mining stocks declined following trading updates from BHP, Beach Energy and Whitehaven Coal. A rebound in Chinese iron ore prices helped raise Rio Tinto and Fortescue Metals.
What’s driving the market
The ASX 200 overcame mixed leads to push for a second straight rise after upbeat earnings lifted Wall Street overnight. The S&P 500 put on 1.14 per cent as Goldman Sachs and Lockheed Martin continued a run of positive surprises.
“Given little economic data expected this week, investors are focusing on corporate earnings, which are mostly better than expected,” Kunal Sawhney, chief executive of research group Kalkine, said.
“Recent corporate earnings have boosted the spirit, more so when many big companies like Walmart and FedEx had in the past warned about subdued revenues in the wake of high inflation.”
Seventy per cent of US companies that have reported so far have beaten expectations, according to FactSet data. Analysts had been downgrading their earnings outlooks for this season amid signs companies faced considerable headwinds from inflation, supply-chain issues, a strengthening greenback and a faltering economy.
A bumpy domestic quarterly reporting season continued this morning with wet weather emerging as a major headwind for miners. BHP, Beach Energy and Whitehaven Coal all attributed production shortfalls last quarter to adverse conditions as La Nina entered a third year.
Earlier in the week, fruit and veg grower Costa Group and building materials supplier Adbri blamed excessive rain for disappointing trading updates.
In economic news, online job ads tumbled a seasonally-adjusted 5.9 per cent last month. The fall – the biggest in 13 months – suggests higher rates are finally taking a toll on the labour market. September jobs figures are due tomorrow.
Going up
Energy infrastructure provider APA rallied 3.61 per cent on confirmation it will acquire the electricity interconnector linking Victoria and Tasmania for $773 million. Basslink creditors backed a deed of company arrangement proposed by APA.
Supermarkets Woolworths and Coles gained 0.93 and 0.54 per cent, respectively. IGA operator Metcash added 1.03 per cent. Other heavyweights to advance included Fortescue Metals +1.2 per cent, Transurban +1.12 per cent and CSL +0.91 per cent.
Positive drill results lifted Chalice Mining 9.57 per cent. Drilling intersected several zones of sulphide mineralisation at the miner’s Julimar nickel-copper-platinum group element project north-east of Perth.
A strong week for lithium miners continued. Core Lithium advanced 7.45 per cent, Pilbara Minerals 5.94 per cent and Allkem 4.86 per cent.
Fund manager Pendal firmed 5.65 per cent after net inflows from Europe and the UK and a stronger greenback helped offset net outflows of $2.3 billion last quarter. Suitor Perpetual nudged up 0.47 per cent despite a 1 per cent decline in assets under management.
Battery materials supplier Novonix requested a trading halt pending an announcement regarding “a material funding arrangement”. The company was the index’s best performer yesterday, soaring 18.99 per cent.
Going down
BHP dropped 0.43 per cent after record wet weather disrupted east coast coal production last quarter. Energy coal production declined by a third from the June quarter. Metallurgical coal was down 19 per cent. The miner maintained its full-year guidance. Copper, nickel and iron ore production increased.
Production at Beach Energy declined 8 per cent as the company struggled with flooding in the Cooper Basin, unplanned outages and natural field decline. The share price hit a nine-month low before trimming its fall to 1.46 per cent.
Coal production at Whitehaven’s three open cut mines was lower than planned due to rain disruption and flooding. Production dropped 37 per cent from the June quarter. A record average coal price of $581 per tonne helped the miner generate $1.55 billion in cash during the quarter. The share price swung from a loss to a gain of 0.96 per cent.
Origin Energy eased 0.44 per cent after forecasting underlying earnings will improve to $500-$650 million this fiscal year from $365 million in FY22. Profits from increased natural gas prices will be the main contributor.
Other markets
US futures surged as Netflix jumped almost 15 per cent in after-market trade. The streaming service this morning announced it gained 2.4 million subscribers in Q3, ending a run of two straight quarterly declines. S&P 500 futures rallied 31 points or 0.82 per cent.
A mixed morning on Asian markets saw the Asia Dow add 0.28 per cent and Japan’s Nikkei improve 0.27 per cent. China’s Shanghai Composite fell 0.25 per cent. Hong Kong’s Hang Seng shed 0.64 per cent.
Oil bounced off a two-week low. Brent crude rallied 60 US cents or 0.67 per cent to US$90.63 a barrel.
Gold rose 40 US cents or 0.02 per cent to US$1,656.20 an ounce.
The dollar inched up 0.07 per cent to 63.2 US cents.
