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The share market pushed towards its longest winning run since August as gains in property and tech stocks outweighed declines in miners.

The S&P/ASX 200 overcame early pressure to regain the 7400 level for the first time in more than three weeks.

The Australian benchmark was last up 17 points or 0.24 per cent at 7399 after earlier hitting 7407. The index has not managed four straight rises since its all-time high on August 13.

What’s driving the market

Long-term interest rates turned lower after the Reserve Bank reaffirmed its long-term commitment to keep official rates at a record-low 0.1 per cent until at least 2024. The yield on ten-year Australian bonds fell almost three basis points to 1.718 per cent. The dollar firmed 0.26 per cent to 74.31 US cents.

The central bank is facing increasing calls to respond to rising energy prices and other inflationary pressures by tightening monetary policy. Financial markets are pricing in a cash rate of 0.5 per cent by mid-2023 and 1 per cent by the end of that year. The minutes from this month’s RBA meeting showed no shift in the bank’s thinking.

“Underlying inflation pressures in Australia were more moderate than in other advanced economies,” the minutes said. “This reflected a range of factors, including the relatively slow rate of wages growth in Australia.

“Members noted that, while it was possible that underlying inflationary pressures in Australia could build more quickly than currently envisaged, the central forecast scenario was still that domestic inflation would pick up only gradually over the medium term.”

Independent economist Stephen Koukoulas this morning called on the bank to revise its outlook.

“At its next Board meeting, on Melbourne Cup day, the RBA needs to ask whether a 0.1 per cent cash rate, aggressive bond purchases and a 0.1 per cent target for what are now 2-and-a-half year government bonds is consistent with the economic and inflation outlook. The answer is clearly no,” he wrote in an opinion piece for Yahoo! Finance.

“At that meeting, the RBA would be wise to start flagging the end to all of these policies and to layout an up-to-date and realistic timetable for what will be an inevitable tightening in monetary policy.”

The market overcame mixed overnight leads in the wake of soft manufacturing updates from China and the US. Strength in tech stocks lifted the S&P 500 0.34 per cent and the Nasdaq 0.84 per cent. The Dow dipped 0.1 per cent.

Going up

A retreat in long-term interest rates encouraged buyers into growth stocks and bond proxies. Goodman Group rallied 2.34 per cent, Afterpay 2.05 per cent, Wesfarmers 1.35 per cent and Coles 1.36 per cent.

Gain in the big banks were kept in check by the drop in rates. Macquarie Group led with a rise of 1.63 per cent to a new all-time high. CBA edged up 0.36 per cent, ANZ 0.14 per cent, NAB 0.1 per cent and Westpac 0.18 per cent.

A 9 per cent lift in sales revenue over the first quarter helped raise Brambles 1.77 cent. The global logistics specialist’s pallets business saw price growth in Europe, increased demand in Australia and a mixed performance in North America. The company expects growth to moderate to 5-7 per cent over the full year.

Hearing implant specialist Cochlear climbed 2.62 per cent after reaffirming a full-year target of growing underlying net profit by 12-20 per cent. Surgery rates are expected to improve in countries affected by Covid-19.

Bapcor climbed 2.66 per cent after tipping a strong second half will offset a weak start to the financial year. The automotive parts business aims to match last year’s pro forma earnings, despite the impact of lockdowns on costs and margins.  

Diversified property group Stockland reaffirmed full-year guidance, but expects much of the heavy lifting to happen in the second half. Residential net sales volumes increased 8 per cent last quarter over 1Q21. However, retail rent collection continued to be impacted by the pandemic. The share price improved 0.76 per cent.

Beleaguered casino group Star Entertainment inched up 0.27 per cent after announcing it had bought itself breathing space by securing debt waivers from its lenders. Two law firms are exploring class actions against the group in relation to its compliance with anti-money laundering and anti-terrorism legislation. The company said it will defend any proceedings.

Going down

BHP fell 1.86 per cent after reporting a 4 per cent decline in iron ore shipments last quarter. The miner attributed the drop to maintenance and rail labour shortages due to border restrictions. The company reaffirmed its full-year production guidance.

Rio Tinto shed 3.27 per cent and Fortescue Metals 1.8 per cent. Other heavyweight drags included Transurban -1.38 per cent, CSL -0.23 per cent and Woolworths -0.2 per cent.

A 7.3 per cent drop in Q1 group revenues helped pull Tabcorp down 2.1 per cent. The gaming group said wagering and media revenues were impacted by lockdown closures, but punters in NSW were returning to pubs, clubs, TABs and racetracks. The group aims to completed the process of demerging its wagering and lotteries divisions by June next year.

Franchisor Retail Food Group sagged 3.53 per cent on news of a class action by a former franchisee. The company said the proceedings related to the operation of the Michel’s Patisserie brand under former leadership. The action will be defended.

Other markets

Asian markets traded ahead. The Asia Dow put on 0.24 per cent, Hong Kong’s Hang Seng 0.24 per cent, Japan’s Nikkei 0.34 per cent and China’s Shanghai Composite 0.25 per cent.

S&P 500 futures retreated three points or almost 0.1 per cent following reports China’s troubled Evergrande Group had suspended negotiations over the sale of a stake in its property services group.

Oil added to its overnight fall. Brent crude shed 43 US cents or 0.5 per cent at US$83.90 a barrel.

Gold reversed last night’s fall, rising US$3 or 0.17 per cent to US$1,768.70 an ounce.

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