Market Herald logo

Subscribe

Be the first with the news that moves the market

The ASX pushed for its strongest finish in almost a month as a broad rally lifted the market for a second day.

The S&P/ASX 200 was ahead 19 points or 0.26 per cent mid-session at 7352 after earlier rising as high as 7382.

A close around that level would be the strongest since the start of the Greater Sydney lockdown. At this morning’s peak, the index came within four points of its June all-time closing high.

Ten of eleven sectors rose, led by tech stocks, industrials and miners. The gains followed another round of record closes on Wall Street overnight. Miner Fortescue Metals, toll road operator Transurban and BNPL leader Afterpay were the pick of the heavyweights.

What’s driving the market

The market has taken around three weeks to digest the implications of the NSW Covid lockdown but has shown signs this week of moving on. The ASX 200 put on 60 points yesterday and briefly had a record within reach today.

While lockdowns deliver an economic jolt to the economy, the silver lining for equity investors is less pressure on the Reserve Bank to raise official rates. The central bank is more likely to stick to its ‘2024-at-the-earliest’ mantra if growth softens.

Small and speculative stocks outperformed in a sign of improving risk appetite. The Small Ords and S&P/ASX Emerging Companies Index both firmed roughly 1 per cent.

Consumer confidence rebounded last week as Sydneysiders started to come to terms with the latest outbreak. The ANZ-Roy Morgan weekly confidence index rose from 107.8 to 110.

Also helping sentiment, New South Wales reported a decline in new local Covid cases to 89 in the 24 hours to 8pm last night from 112 over the prior period. Queensland and Victoria reported two new local cases each.

Business confidence eased last month from exceptionally high levels, but remained elevated by historic standards. NAB’s sentiment index dropped to 11 from 20 in May. The conditions index fell to 24 from 36. The survey was carried out before the NSW lockdown.

US stocks closed at record levels overnight ahead of a week of potential market-moving events. The S&P 500 and Dow both put on roughly 0.35 per cent.

The Q2 US earnings season gets underway tonight with reports from Goldman Sachs and JPMorgan Chase. Inflation reports were due tonight and tomorrow. Federal Reserve Chair Jerome Powell was scheduled to start two days of congressional testimony tomorrow night.

Going up

Sectors tied to economic growth outperformed. Industrials gained 0.97 per cent and materials 0.74 per cent.

Fortescue Metals put on 1.82 per cent, Transurban 1.32 per cent, Brambles 1.06 per cent, Rio Tinto 1.1 per cent and Newcrest 0.48 per cent. BHP faded 0.06 per cent.

Tech was the morning’s other big mover. Megaport gained 2.92 per cent, EML Payments 3.46 per cent and Afterpay 1.46 per cent.

A profit upgrade lifted aerial mapping firm Nearmap 14.36 per cent to its highest level since early May. The company announced it expected annual contract value for the year of $133.8 million, topping recent guidance of $128 – $132 million.

Shares in the tech firm slumped in May when a US rival lodged a court action alleging patent infringement. Nearmap said it would defend the claims.

Incitec Pivot jumped 8.85 per cent on news its Waggaman ammonia plant in the US had regained full production following a shutdown for repairs. The company also announced changes to its management structure.

Most of the finance giants advanced. Macquarie Group gained 0.41 per cent, ANZ 0.14 per cent and NAB 0.36 per cent. Westpac eased 0.33 per cent and CBA 0.45 per cent.

Supermarkets Coles and Woolworths advanced 1.26 and 0.43 per cent, respectively. Wesfarmers gained 0.33 per cent.

YouFoodz‘s time on the boards looks like being short after the Queensland food delivery service agreed to be swallowed by multinational HelloFresh. The Australian company listed at $1.50 in December but quickly lost more than two-thirds of its market value.

HelloFresh has struck a deal to buy out shareholders at 93 cents per share – an 82 per cent premium to yesterday’s closing price. Shares in the Aussie firm jumped 77.45 per cent to 90.5 cents.

Going down

Oil’s first setback in three sessions weighed on some of the producers. Woodside Petroleum eased 0.6 per cent. Oil Search lost 0.13 per cent. The sector was kept in positive territory by rises in Santos +0.28 per cent, Ampol +0.41 per cent and Beach Energy +0.78 per cent.

Asset manager Platinum sank 6.74 per cent after reporting net outflows of $167 million last month.

Other markets

Asian markets climbed for a second day. The Asia Dow put on 0.93 per cent, China’s Shanghai Composite 0.26 per cent, Hong Kong’s Hang Seng 1.45 per cent and Japan’s Nikkei 0.85 per cent.

US futures were flat. S&P 500 futures eased a point or 0.03 per cent.

Oil pared overnight falls. Brent crude bounced eight cents or 0.11 per cent to US$75.24 a barrel. Gold rallied $7.40 or 0.41 per cent to US$1,813.30 an ounce.

The dollar rose 0.26 per cent to 74.97 US cents.

More From The Market Herald

" ASX Close: China stimulus, US futures help ASX pare loss

The share market fell for the fourth time in five sessions but finished well off its low as investors rotated into defensive plays.

" ASX Update: Market stages partial recovery from eight-month low

The share market slumped to an eight-month low before paring its losses as rising US futures sharpened hopes of a relief rally following

" ASX Today: US carnage signals shaky start to trade

A holiday-interrupted week looked set to open near an eight-month low following Wall Street’s worst week since the early days of the pandemic.

" ASX Close: Worst week since 2020 as traders rush exits

The share market skidded almost 2.3 per cent to its weakest close in seven months as falling US equity futures compounded overnight losse…