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A resurgent ASX hit its highest level in more than six weeks led by technology and iron ore stocks following record highs on Wall Street.
The S&P/ASX 200 cracked 6900 for the first time since mid-February, passing 6915 before trimming its advance to 71 points or 1.04 per cent as US futures responded to declines in Asia.
Afterpay and the big three ore producers spearheaded the advance, supported by banks and industrials.
What’s driving the market
The ASX played catch-up with two sessions of strong gains in the US either side of the long weekend. While Australia indulged in the annual orgy of chocolate eggs and hot cross buns, US stocks recorded back-to-back record highs. The S&P 500 climbed 1.44 per cent overnight, extending Thursday night’s 1.2 per cent advance. The gains came as economic data reinforced confidence the recovery was gathering strength.
“The US economic news since last Thursday has all fallen into the ‘strong, and stronger than expected’ bucket,” NAB Head of FX Strategy Ray Attrill wrote. A measure of services sector activity hit an all-time high. The economy added almost 50 per cent more jobs than expected last month. “So the US equity market has posted consecutive record highs – on Thursday and Monday – with IT, Consumer Discretionaries and Communications sectors leading Monday’s charge (all up by more than 2%),” he added.
The rate-sensitive Australian tech sector soared 4.3 per cent to its strongest level in a month. Sector leader Afterpay soared 8.2 per cent after the Australian ten-year bond yield retreated more than four basis points and the Nasdaq Composite put on 3.5 per cent in two sessions. WiseTech gained 5.6 per cent, Nearmap 4.6 per cent and Nuix 4.3 per cent.
An upgraded iron ore forecast from ratings agency S&P Global helped lift the big three domestic producers. S&P raised its ore price assumption for the year from US$100 a tonne to US$130, citing a global supply deficit. The agency also hiked its price outlook for next year.
“In our view, global demand will continue to outstrip supply over the next one to two years,” S&P analyst Donald Marleau wrote.
BHP climbed 1 per cent, Fortescue Metals 1.4 per cent and Rio Tinto 0.9 per cent. Champion Iron gained 4.3 per cent.
The Reserve Bank met this morning and was scheduled to release an updated policy statement at 2.30 pm AEST.
Going up
All 20 market heavyweights of the ASX 20 advanced. Gains ranged from a slender 0.1 per cent for Brambles to Afterpay’s 8.2 per cent. On the wider ASX 200, roughly four out of every five companies rose.
Cleanaway soared 11.1 per cent after striking a deal to buy French waste manager Suez Groupe’s Australian operations for $2.52 billion. Suez employs more than 2,000 people in Australia and operates six landfills and 59 collection and depot facilities. Cleanaway will fund the deal by raising capital and adding debt.
Re-opening plays followed their US counterparts higher. Webjet added 4.7 per cent, Flight Centre 3.4 per cent, Qantas 2.4 per cent and Sydney Airport 2.2 per cent.
The best of the behemoths outside the tech and materials space were Transurban +3.1 per cent, Aristocrat Leisure +1.7 per cent and Wesfarmers +0.9 per cent. Westpac gained 0.9 per cent, ANZ 0.8 per cent, NAB 0.6 per cent and CBA 0.6 per cent.
Going down
A delay in restarting operations at Incitec Pivot‘s US ammonia plant sent the chemicals manufacturer’s shares down 8.2 per cent. Production will be postponed by at least a month following a seal failure and excessive vibrations in a fan turbine at the Waggaman plant. The turnaround cost was expected to be $80 million.
Real estate group Dexus sank 1.4 per cent after announcing the sale of 34-storey office asset 10 Eagle Street, Brisbane, for $285 million.
AMP unwound Thursday’s gains, which followed the departure of CEO Francesco De Ferrari. The share price retreated 5.1 per cent.
Oil companies traded mixed following a 4.2 per cent dive in Brent crude overnight. Woodside edged up 0.4 per cent. Oil Search slid 1.1 per cent and Santos 1.4 per cent.
Other markets
US futures turned negative as Asian markets declined. The Asia Dow sank 0.29 per cent. China’s Shanghai Composite shed 0.06 per cent and Japan’s Nikkei 0.7 per cent. S&P 500 futures dropped six points or more than 0.1 per cent.
Oil rebounded from last night’s 4.2 per cent slump. Brent crude bounced 71 cents or 1.1 per cent to US$62.85 a barrel. Gold gained $6.80 or 0.4 per cent at US$1,735.60 an ounce.
The dollar eased 0.18 per cent to 76.43 US cents.
