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A fourth day of gains powered the share market to within 12 points of a pandemic-era peak as tech and property stocks set the pace.
The S&P/ASX 200 reached mid-session 10 points or 0.15 per cent ahead at 6896 after topping out at 6926. The rally positioned the index for its first four-session win run of the year and – potentially – a new pandemic-era closing high.
What’s driving the market
Yesterday’s breakout session gave the local market enough momentum to ignore a modest US retreat. The S&P 500 eased 0.1 per cent overnight from Monday’s record close. The Dow dipped 0.29 per cent as caution set in ahead of the start of a new quarterly reporting season next week.
The ASX 200 broke overhead resistance yesterday, rising 0.84 per cent to its strongest close since a spike in bond yields triggered inflation jitters. Tech stocks shone again this morning as those worries continued to ease. The I.T. sector climbed 1 per cent to its highest level since late February. Afterpay gained 2 per cent, Nearmap 2.3 per cent and Xero 0.4 per cent.
“The softening of bond yields is evident while market players are eyeing the US Fed’s release of minutes from its last monetary policy meeting today. This is further holding the bulls of bond yields mania, thereby giving a leg up to the tech sector,” Kalkine Group CEO Kunal Sawhney said.
“Market concerns seem to be pacified by the repeated assurance from central banks quashing the possibility of early tightening of monetary policy amid inflation concerns. Keeping rates at 0.1% as expected, the RBA has again emphasised that no hike is likely until 2024 at the earliest until wage growth and inflation pick up decisively.”
The morning’s economic news was mixed. Construction activity hit an all-time high last month as builders scrambled to start projects before the HomeBuilder deadline. The AiG Performance of Construction Index climbed 4.4 points to a record 61.8.
“Employment grew at the most rapid pace in the history of the series and wages rose faster than at any time since the Global Financial Crisis,” Ai Group Head of Policy, Dr Peter Burn, said. “New orders went through the roof in March in part fuelled by the looming cut offs for the HomeBuilder program. While this surge in new orders is very likely to fade from here on, work will continue to flow through construction supply chains for many months and will provide ongoing stimulus to the sector and the broader economy,” he added.
Consumer confidence eased last week as JobKeeper ended and Brisbane went into lockdown. ANZ’s weekly measure dropped 4.6 points, the sharpest fall since last March.
Going up
The REIT sector surged to its strongest level of the year. Real estate investment trusts offer an attractive alternative to bonds when yields decline. Charter Hall Group rallied 3.6 per cent, GPT Group 3.5 per cent, Dexus 3.4 per cent and Goodman Group 0.9 per cent.
Healthcare, another bond surrogate, gained 0.4 per cent as Sonic added 2.4 per cent, Fisher & Paykel 1.4 per cent and Ramsay 0.8 per cent. CSL faded to a loss of 0.1 per cent.
The heavyweight banks and miners were mixed. Newcrest gained 1.1 per cent and CBA 0.2 per cent. Westpac tacked on 0.2 after APRA signed off on the bank’s plan to fix its risk governance. BHP and Fortescue Metals shed 1 per cent, ANZ and NAB 0.3 per cent, and Rio Tinto 0.1 per cent.
EML Payments was the index’s best performer, rising 8 per cent to a new high on news of a move into open banking. The payments platform will acquire European payments provider Sentenial for around $108.6 million up-front and an earn-out of $62.1 million. Sentenial’s customers included four of the UK’s top banks.
Ramelius Resources edged up 1.6 per cent after hitting its quarterly gold target. The miner produced 66,029 ounces in the first three months, the lower end of guidance.
Positive drill results from Cote d’Ivoire helped lift Perseus 4 per cent. An updated mine plan boosted Resolute shares by 3.9 per cent.
Going down
The biggest heavyweight drags outside the banks and miners were supermarket Coles -1.4 per cent, toll road operator Transurban -1.3 per cent and Telstra -0.6 per cent.
Cleanaway sank 3.5 per cent after rival Veolia attacked Suez Groupe’s plan to sell the Australian waste manager its Australian operations. Veolia, which wants to acquire Suez, accused its target of acting against its own shareholders’ best interests.
Adbri declined 5.2 per cent as it traded without the right to a dividend.
Other markets
Asian markets were mostly lower. The Asia Dow dropped 0.39 per cent. China’s Shanghai Composite shed 0.62 per cent and Hong Kong’s Hang Seng 0.55 per cent. Japan’s Nikkei was ahead 0.01 per cent.
S&P 500 futures traded unchanged. Dow futures edged up 17 points or less than 0.1 per cent.
Oil pared overnight gains. Brent crude eased eight cents or 0.1 per cent to US$62.66 a barrel.
Gold retreated $4.10 or 0.2 per cent from last night’s five-week high to US$1,738.90 an ounce.
The dollar edged up 0.03 per cent to 76.63 US cents.
