Join our daily newsletter At The Bell to receive exclusive market insights
Growth stocks steered the ASX towards its third gain of the week despite declines in the heavyweight miners and banks following falls in commodities and bond yields.
The S&P/ASX 200 rose 21 points or 0.28 per cent. The rally reversed most of yesterday’s 27-point loss, the index’s first in five sessions.
The tech sector surged almost 3 per cent to a two-month high as inflation worries temporarily subsided. Mining stocks slumped following a torrid night on metals exchanges.
What’s driving the market
Buyers returned to the market after US stocks steadied following Wednesday night’s rates tantrum. The Nasdaq Composite rallied 0.87 per cent overnight amid a rotation from cyclical stocks back to growth sectors. The Dow sank 0.62 per cent. The S&P 500 finished near flat.
Afterpay spearheaded a 2.95 per cent surge in the Australian tech sector as falling bond yields signalled concerns about inflation were momentarily easing. The BNPL leader rose 4.71 per cent.
Rival Zip Co jumped 7.96 per cent. EML Payments gained 3.84 per cent, Nearmap 3.79 per cent and Megaport 3.68 per cent.
“Investors pumped money into growth-oriented technology stocks amid improved market sentiment on hopes of stronger economic recovery. The boost in technology stocks stimulated significant gains in the benchmark index. BNPL players are the shining stars in today’s session,” Kalkine Group CEO Kunal Sawhney said.
Mining stocks staggered under a double assault from a surging US dollar (making dollar-denominated commodities more expensive for holders of other currencies) and from Chinese attempts to suppress metals prices by releasing strategic reserves. The US dollar index touched a two-month high overnight after the Federal Reserve indicated it expected rates to rise sooner than the market anticipated.
“If high inflation readings begin to abate in the coming months, commodities may suffer a significant hit as they have been a popular investment vehicle over the last year as investors hedged against inflation,” Kalkine’s Sawhney said.
“In fact, signs of a broader commodity selloff are already evident after the Federal Reserve meeting. US crude futures plunged the most in a month on Thursday. Given this scenario, the market may see financial investors, who have been piling into commodities to guard against inflation, rotating into growth-oriented stocks.”
Newcrest bore the brunt of this morning’s selling after gold collapsed 4.7 per cent overnight. The leading gold producer fell 3.46 per cent.
A bounce in iron ore cushioned other mining giants from deeper losses. BHP sank 1.45 per cent, Rio Tinto 0.27 per cent and Fortescue 0.35 per cent.
Going up
US-facing businesses shone after the US dollar charged higher for a second night. Aristocrat Leisure jumped 3.59 per cent, Transurban 1.36 per cent, CSL 1.51 per cent and Sonic Healthcare 3 per cent.
ResMed climbed 2.53 per cent to a new record. James Hardie also hit a new high, up 2.46 per cent.
Telstra bounced 2.56 per cent ahead of its delisting from New Zealand stock exchange on Monday.
Supermarket Coles rose 1.04 per cent. Rival Woolworths eased 1.76 per cent after shareholders voted to demerge the Endeavour drinks business from the supermarket and the Fair Work Commission instigated legal action against the group over alleged underpayment of staff.
Bubs surged 26 per cent on news US retail giant Walmart will sell its infant formula online from September. Bubs will establish a US subsidiary to spearhead the company’s launch into the US market.
Takeover target Altium edged higher despite warning a strong second half would not make up for a slow start to the year. The software-maker said full-year revenue was now expected to be at or below the lower end of guidance of $190 – $195 million. The share price climbed 4.68 per cent. The company received an unsolicited approach from US multinational Autodesk earlier this month.
REA Group climbed 4.27 per cent to a new high ahead of completing its acquisition of Mortgage Choice. Trade in Mortgage Choice shares was set to be suspended at the end of the session.
BetMakers jumped 11.11 per cent after completing the acquisition of Sportech’s racing, tote and digital business. The assets will provide a bridgehead into the American market.
Going down
Energy was the morning’s worst performer after the rising greenback pulled crude down 1.8 per cent. Santos fell 4.14 per cent, Woodside 2.78 per cent, Oil Search 2.29 per cent and Beach Energy 1.87 per cent.
Losses among gold miners were modest relative to the metal’s 4.7 per cent overnight fall, thanks to a partial rebound in precious metals this morning. Northern Star eased 1.38 per cent, Resolute 0.92 per cent and Silver Lake Resources 0.9 per cent.
The financial sector pulled back from yesterday’s four-year peak. CBA dipped 1.29 per cent, ANZ 0.86 per cent, NAB 0.63 per cent and Westpac 0.37 per cent.
Other markets
A mixed session on Asian markets saw the Asia Dow fall 0.49 per cent and China’s Shanghai Composite lose 0.02 per cent, while Hong Kong’s Hang Seng gained 0.53 per cent and Japan’s Nikkei added 0.31 per cent.
S&P 500 futures rallied seven points or 0.16 per cent.
Oil added to overnight losses. Brent crude sagged 59 cents or 0.81 per cent to US$72.49 a barrel.
Gold bounced $9.90 or 0.56 per cent to US$1,784.80 an ounce.
The dollar slumped to a two-month low overnight and continued to fade this morning. The Aussie slipped 0.06 per cent to 75.52 US cents.
