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The share market added to this week’s slender advance as gains in banking and technology stocks helped offset declines in energy following falls in crude oil and gas overnight.
The S&P/ASX 200 rallied 55 points or 0.75 per cent towards its first rise in three sessions. This morning’s advance extended the index’s tally for the week to 76 points.
Afterpay, Macquarie Group and NAB were the pick of the heavyweights. Woodside Petroleum, BHP and Fortescue Metals declined.
What’s driving the market
A swing session on Wall Street helped put a floor under the market following two wobbly sessions. Overnight, the S&P 500 reversed from a loss of almost 1.3 per cent to a gain of 0.41 per cent after Senate Republicans offered a way out of a stalemate over the approaching government debt ceiling.
“Words from politicians of various stripes have gone a little way to alleviating two of the major concerns currently plaguing global markets, namely the ongoing energy crisis centred on Europe and the looming deadline for lifting or scrapping the US debt ceiling,” NAB’s Head of FX Strategy Ray Attrill said.
Republican Senate Minority Leader Mitch McConnell said he would support a stop-gap extension to the debt limit to allow the Democrats to firm up a longer-term solution and avoid a potentially devastating default.
Russian President Vladimir Putin said Moscow would increase gas supplies to alleviate an energy panic in Europe. Gas futures in the Netherlands surged as much as 40 per cent before Putin’s intervention drove prices down 10 per cent. European stocks finished lower. In Asia, natural gas prices eased 2.9 per cent. Global crude and coal also declined.
“Energy led the losses, with crude oil, LNG and thermal coal all lower. Industrial metals fell in sympathy, with copper and zinc leading the losses,” commodity strategist Daniel Hynes of Hynes Commodities said.
Going up
Rate-sensitive tech stocks and companies that compete with bonds for investment flows rallied as long-term yields backed off four-month highs. The yield on ten-year Australian government bonds eased more than a point to 1.606 per cent after touching 1.62 per cent yesterday.
Megaport gained 3.85 per cent, Nearmap 3.3 per cent, EML Payments 3.2 per cent and Afterpay 2.76 per cent. Among bond surrogates, Transurban rose 0.83 per cent, Goodman Group 0.86 per cent, CSL 0.51 per cent and Woolworths 0.64 per cent.
The financial sector provided much of the muscle behind the advance. Macquarie Group put on 1.8 per cent, NAB 1.27 per cent, Westpac 1.13 per cent and ANZ 0.76 per cent. CBA faded 0.26 per cent following a broker downgrade yesterday.
Australian Pharmaceutical Industries (API) rose 1.67 per cent as Wesfarmers firmed as a likely buyer after securing Washington H. Soul Pattinson’s 19.3 per cent stake in the pharmaceutical wholesaler. Wesfarmers said it remained committed to acquiring 100 per cent of the shares in API despite a rival bid from Sigma Health.
Wesfarmers shares edged up 0.85 per cent. Sigma gained 0.88 per cent.
Collins Foods climbed 6.51 per cent on news it had contracted to run the KFC franchise in the Netherlands. Managing Director and CEO Drew O’Malley said there was a substantial opportunity to grow the business, due to the brand’s low penetration rate relative to other markets.
Mayne Pharma gained 0.79 per cent after the US regulator asked for more information about the company’s application to sell a generic version of the NuvaRing birth control device. Mayne said the response from the Food and Drug Administration was a step closer to approval.
Going down
Coal producers retreated from multi-year highs after China began releasing Australian imports from bonded storage to relieve an energy crunch. Reuters reported China had released supplies that had been unloaded, then locked away as part of an unofficial Chinese ban on Australian coal dating back to November.
Whitehaven Coal fell 6.96 per cent, New Hope 2.34 per cent and Coronado 3.03 per cent.
Oil and gas companies retreated in the wake of commodity price falls. Santos dropped 1.88 per cent, Oil Search 1.76 per cent, Beach Energy 1.4 per cent and Woodside Petroleum 0.38 per cent.
Fortescue Metals eased 1.3 per cent to a fresh 15-month low ahead of the resumption of iron ore trade in China tomorrow at the end of Golden Week. BHP declined 0.22 per cent. Rio Tinto inched up 0.42 per cent.
Qube dropped 0.61 per cent after the competition regulator, the ACCC, announced an investigation into the logistics firm’s $90 million acquisition of the Newcastle Agri Terminal. The regulator said Qube ignored a request to delay completion while the ACCC assessed the deal.
“By choosing to proceed before the ACCC had a chance to conduct its review, Qube and the former owners of the Newcastle Agri Terminal are exposed to potential legal action by the ACCC,” Chair Rod Sims said.
Other markets
US futures rose with Asian markets. The Asia Dow climbed 1.16 per cent, Hong Kong’s Hang Seng 1.43 per cent and Japan’s Nikkei 0.99 per cent. Mainland Chinese markets were closed for the last day of Golden Week.
S&P 500 futures gained 18 points or 0.42 per cent.
Oil continued to lose ground in the wake of last night’s 1.8 per cent decline. Brent crude slipped 21 US cents or 0.26 per cent to US$80.87 a barrel.
Gold improved 60 US cents or 0.03 per cent to US$1,762.40 an ounce.
The dollar lifted 0.08 per cent to 72.85 US cents.
