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A partial rebound in miners and gains in tech stocks helped the ASX rise for the first time in six sessions.
The S&P/ASX 200 put on 32 points or 0.43 per cent by the halfway mark.
BHP and Rio Tinto rallied for the first time in a week. Afterpay, Appen and Nearmap steered the tech sector higher. A mixed bag of corporate earnings and declines in defensive assets kept gains in check.
What’s driving the market
An end-of-week relief rally on Wall Street handed the ASX a springboard from the local market’s worst week since January. The ASX 200 shed 2.2 per cent last week as Covid case numbers hit record highs, the dollar slumped and commodities responded to global growth worries.
Last week’s biggest weight on the index, BHP, bounced 0.68 per cent. Rio Tinto inched up 0.05 per cent. Pilbara Minerals jumped 8.42 per cent. The gains followed end-of-week recoveries in iron ore and most base metals.
US stocks trimmed a losing week as commodity markets arrested their declines and a leading Federal Reserve “hawk” said the spread of the delta Covid variant might force him to rethink his support for reducing the bank’s bond-buying program. The S&P 500 bounced 0.81 per cent.
Dallas Federal Reserve President Bob Kaplan said, “The thing that I am going to be watching very carefully over the next month, before the next [Federal Reserve] meeting, is [whether] it is having a more material impact on slowing demand and slowing GDP growth. I’m going to keep an open mind on that, and if it is having a more negative effect that might cause me to adjust my views somewhat from ones that I’ve stated.”
US futures rose, hinting at a positive start to tonight’s trade. S&P 500 futures firmed 14 points or 0.3 per cent.
Australian data continued to reinforce the impact of lockdowns on economic activity. Markit’s composite business purchasing managers’ index fell to 43.5 this month from 45.2 in July, according to preliminary data. Services sector activity dropped to 43.3 from 44.2. Manufacturing growth slowed to a 14-month low of 51.7 from 56.9.
Going up
Tech stocks outperformed as a four-month slide in bond yields favoured growth stocks over cyclicals. Nearmap climbed 7.38 per cent, Appen 6.09 per cent, Nuix 3.56 per cent and Afterpay 2.67 per cent.
Record fund inflows helped lift property investor Charter Hall 6.2 per cent to a new peak. The company said its funds under management grew $11.7 billion last financial year.
Utility Spark Infrastructure rallied 2.17 per cent to $2.83 on news the board had agreed to be acquired at $2.95 by a consortium including US private-equity firm Kohlberg Kravis Roberts and the Ontario Teachers’ Pension Plan Board. The board rejected two previous offers from the consortium at lower prices.
Lynas Rare Earths climbed 3.32 per cent on news vaccination rates among its Malaysian employees had reached 98 per cent (first dose) and 94 per cent (second dose). The company’s Malaysian plant has been running at reduced rates to comply with government guidance.
Going down
Sonic Healthcare retreated 3.06 per cent from record levels despite a 149 per cent surge in full-year net profit, thanks largely to coronavirus testing. The pathology company’s earnings jumped 81 per cent to $2.6 billion. Managing Director and CEO Dr Colin Goldschmidt said the firm was actively considering acquisitions.
A profit miss and a cautious outlook helped pull NIB Holdings down 9.27 per cent.
While the health insurer declared an 84.5 per cent leap in full-year net profit to $160.5 million, the result fell short of the $168 million anticipated by analysts polled by Bloomberg. Managing Director Mark Fitzgibbon said the pandemic continued to muddy the outlook for the year ahead.
Healius climbed 1.07 per cent during a busy session in the healthcare sector on news Virtus Health will buy its IVF business for $45 million. Virtus shares entered a trading halt while it raises funds for the acquisition.
Ampol declined 4.5 per cent as a $2 billion bid for Z Energy overshadowed improved half-year earnings and profit. The fuel supplier offered NZ$3.78 per share for its New Zealand rival, a 35 per cent premium to Z Energy’s price on July 26 before news of Ampol’s interest leaked.
The Australian company raised its replacement cost operating net profit 78 per cent to $205 million. Z Energy has granted its suitor four weeks for exclusive due diligence.
Childcare operator G8 Education sagged 7.14 per cent after warning lockdowns were starting to impact occupancy in the eastern states. The company said the hit to earnings was not material in July but downside risks increased this month. The warning took the edge off news the company swung back into profit last half.
Among other companies reporting, Event Hospitality rose 5.21 per cent and McGrath 5.66 per cent. Reliance Worldwide eased 1.52 per cent, Cooper Energy 2.44 per cent, oOh!media 0.66 per cent and Chorus 3.07 per cent. Latitude Group was unchanged.
Aurizon sank 2.96 per cent and Super Retail Group 4.62 per cent as they traded without dividends.
Other markets
Asian markets logged strong gains. The Asia Dow added 1.7 per cent, China’s Shanghai Composite 1.26 per cent, Hong Kong’s Hang Seng 2.21 per cent and Japan’s Nikkei 1.73 per cent.
Oil pushed for its first advance in eight sessions. Brent crude rebounded 71 US cents or 1.1 per cent to US$65.89 a barrel.
Gold rose US$3.50 or 0.2 per cent to US$1,787.50 an ounce.
The dollar bounced 0.31 per cent to 71.6 US cents.
