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The ASX rose for a third day as a recovery in tech stocks accelerated. Strengthening commodity prices and an upbeat trading update from NAB lifted mining and some bank stocks.
The S&P/ASX 200 trimmed a 68-point opening surge to 12.5 points or 0.17 per cent by mid-session. The initial rally lifted the benchmark above 7300 for the first time in almost three weeks. At the halfway mark, the index pared its advance to 7281.
A pause in rising interest rates helped lift the tech sector 3.1 per cent. NAB jumped 3.3 per cent after reporting a quarterly profit of $1.8 billion. Miners were boosted by gains in uranium, lithium and industrial metals.
What’s driving the market
This morning’s advance continued a global rally over the last 24 hours as pressure on bond markets abated for the first time in days. The S&P 500 rose 1.45 per cent. The rates-sensitive Nasdaq Composite jumped 2.08 per cent. Europe’s benchmark had its best night in two months.
“The market seems to have found a more constructive tone in the tug of war between trepidation over the Fed and the better fundamentals that we’ve seen in both earnings and the economic data,” Art Hogan, chief market strategist at National Securities, said.
Bond yields climbed to multi-month highs on both sides of the Pacific earlier this week as traders prepared for a blistering US inflation report tonight. Headline inflation in the consumer price index (CPI) is expected to be the strongest since 1982.
Relief in rates pressure encouraged investors to pick up growth names that led last month’s retreat. The Australian tech sector jumped 3.1 per cent as Afterpay parent company Block bounced 9.12 per cent, Megaport 7.64 per cent and Appen 5.08 per cent.
The domestic reporting season delivered winners and losers. NAB, AMP and AGL Energy attracted a bid. ASX Ltd, Downer EDI, Mirvac, Northern Star and CIMIC went backwards (more on all below).
The market came off its early peak as US futures deteriorated. S&P 500 futures were recently down 13 points or almost 0.3 per cent. Nasdaq futures weakened 51 points or 0.34 per cent.
Going up
Market share gains in lending and deposits helped NAB boost cash earnings by 9.1 per cent over the first three months of the year. Home lending grew 2.6 per cent and small/medium business lending by 3.4 per cent.
“We gained market share across our core lending and deposit products,” CEO Ross McEwan said.
The bank declared an unaudited net profit of $1.8 billion. Revenue increased 8 per cent from the previous quarter. Net interest margin tightened by five basis points. The share price jumped 3.17 per cent.
The rest of the financial sector was mixed. ANZ added 0.4 per cent and Westpac 0.25 per cent. CBA shed 0.8 per cent and Macquarie Group 2.6 per cent.
Miners rose on advances in uranium, lithium, aluminium and other industrial metals. Paladin Energy jumped 7.09 per cent, Liontown Resources 4.97 per cent and Chalice Mining 4.17 per cent. Mineral Resources gained 4.04 per cent, Fortescue Metals 3.92 per cent and Allkem 3.79 per cent.
AGL Energy inched up 0.13 per cent after raising the lower end of its full-year guidance. The energy provider narrowed its underlying profit outlook to $260-$340 million from previous guidance of $220-$340 million. The change reflected a “solid first half performance” even as underlying profit declined 41 per cent. The company cut its interim dividend to 16 cents per share from 41 cents last year.
AMP rose 3.96 per cent amid signs of a turnaround within its bank and wealth management businesses. The investment manager reported a full-year loss of $252 million, primarily due to previously-announced impairment charges. Assets under management increased by 8 per cent as net outflows slowed. Bank profits increased 38 per cent.
Going down
The exchange operator, ASX Ltd, eased 4.51 per cent on news CEO and Managing Director Dominic Stevens will retire. Stevens spent nine years with the company, including six as CEO.
The news overshadowed a record half year. The company increased earnings by 6 per cent to $338.4 million. First-half highlights included a record number of capital raisings and the most listings since 2008.
Downer EDI fell 4.74 per cent after Omicron issues threw the firm’s full-year outlook into doubt. Underlying net profit dropped 18.1 per cent to $97.6 million over the first half as the integrated services provider battled supply chain issues and volatile workflow.
“With the arrival of Omicron it has been a tough six months to navigate,” CEO Grant Fenn said.
Mirvac dipped 3.26 per cent after the Omicron wave impacted supply chains, labour and rent collection last half. Despite the headwinds, the property group increased operating profit by 9 per cent to $297 million. Strength in the residential and industrial portfolio helped offset pressure on retail.
CIMIC declined 5.55 per cent on news profits deteriorated last year even as revenues increased. Full-year profit slumped 35.2 per cent to $402.1 million. Revenue increased by 39.1 per cent. The construction giant expects to increase profit this year to $425-$460 million.
Northern Star dipped 0.12 per cent after reaffirming full-year guidance. The gold miner reported a 43 per cent increase in half-year profit to $261 million. Revenues increased 63 per cent from the prior corresponding period, thanks to increased production after merging with Saracen Mineral.
Other markets
A generally subdued morning on Asian markets saw the Asia Dow ahead 0.09 per cent, Hong Kong’s Hang Seng 0.46 per cent and Japan’s Nikkei 0.14 per cent. China’s Shanghai Composite fell 0.3 per cent.
Oil softened overnight gains. Brent crude dipped 10 US cents or 0.1 per cent to US$91.45 a barrel.
Gold trimmed a four-day rally. The yellow metal reversed US$2 or 0.1 per cent to US$1,834.60 an ounce.
The dollar eased 0.14 per cent to 71.67 US cents.
