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The ASX 200 closed above 7400 for the first time in a week as positive US leads and gains in technology and banking stocks helped offset declines in energy producers.
The Australian benchmark rallied 35 points or 0.48 per cent to a second straight advance.
Afterpay gained more than 2 per cent as a US takeover cleared an important hurdle. Commonwealth Bank and Macquarie Group closed at all-time highs.
What moved the market
The market finished at a session peak following record closes in the US overnight. The Dow, S&P 500 and Nasdaq Composite all ended at a fourth straight all-time highs after the Federal Reserve announced plans to reduce support for the economy. The S&P 500 gained 0.65 per cent.
“It is always uncertain how financial markets will react to decisions to pare back stimulus. But all major US sharemarket indexes rallied to finish the session at record highs. The US dollar eased modestly. And US 10-year bond yields rose by 5 points to 1.60 per cent. So mission accomplished,” CommSec Chief Economist Craig James said.
The Fed will reduce its bond-buying program by US$15 billion each month from the current level of US$120 billion a month. The change had been flagged well in advance to avoid a repeat of the 2013 “taper tantrum” when the central bank pared back stimulus following the GFC.
“The Fed did a good job communicating its intentions well in advance of today’s meeting, which is why we aren’t seeing a ‘taper-tantrum 2.0,’” Lawrence Gillum, fixed income strategist at LPL Financial, said.
Australia joined a regional rally in the wake of the US rally. The Asia Dow rose 0.57 per cent, China’s Shanghai Composite 0.64 per cent, Hong Kong’s Hang Seng 0.27 per cent and Japan’s Nikkei 0.74 per cent.
ASX gains were constrained for much of the session by weakness in key commodities and overnight strength in the dollar. The rally accelerated as the Aussie pared overnight gains, easing 0.34 per cent to 74.43 cents. Crude and most industrial metals declined.
Weak retail sales data compounded the cautious morning mood. A record 4.4 per cent decline in sales last quarter will knock around 0.8 per cent off GDP, according to the chief economist of IFM Investors, Alex Joiner.
Winners’ circle
Buy now pay later leader Afterpay moved closer to being absorbed by Square after the US giant’s shareholders approved the acquisition. Stockholders voted in favour of issuing new stock to Afterpay shareholders, satisfying a key condition for the takeover to proceed. Afterpay shares climbed 2.35 per cent.
Adbri put on 2.96 per cent after acquiring a concrete and quarry business. The construction materials manufacturer will pay $58 million for Zanows, a Queensland operator of two concrete plants, a sand and gravel quarry and a hard rock quarry.
Rival CSR rose 4.67 per cent on news half-year net profit jumped 30 per cent to $86.6 million despite Covid headwinds. The firm said its largest business, Building Products, was performing well.
An 8.5 per cent increase in first-quarter premium income helped lift health insurer NIB 5.78 per cent. New Chair David Gordon told shareholders membership increased by 3,800, placing the insurer on track to achieve targetted growth of 3 per cent for the full year.
Macquarie Group rallied 1.33 per cent to a record close. CBA advanced 1.4 per cent to a new closing high. ANZ added 0.88 per cent, NAB 0.42 per cent and Westpac 0.22 per cent.
Other heavyweight gainers included Telstra +0.77 per cent, Wesfarmers +0.66 per cent and CSL +0.35 per cent.
Doghouse
Domino’s Pizza slumped 18.4 per cent after outlining major expansion plans and warning of inflationary pressures on costs. CEO and Managing Director Don Meij told the AGM the fast-food group intends to open a record number of stores this year.
“We are targeting FY22 to be the largest expansion of our store footprint in our Company’s history,” he said.
Anticipated headwinds this year include rising energy and food costs. Increased unit sales are intended to offset “short-term inflation”. The company also warned sales growth across its regions had been “uneven”. Goldman Sachs and Citi both cut their price targets.
Poultry producer Inghams eased 5.01 per cent after warning of pressures from shipping costs for feed. CEO Andrew Reeves told today’s AGM “sustained input cost pressures have the potential to place upward pressure on market pricing”.
Energy stocks declined with crude. Woodside Petroleum shed 2.67 per cent, Beach Energy 5.15 per cent and Santos 3.12 per cent.
Crude oil continued to retreat ahead of tonight’s OPEC+ meeting. Brent crude sank 61 US cents or 0.74 per cent to US$81.38 a barrel. Oil fell 3.2 per cent overnight to its lowest in around a month after US inventories rose for a second week.
Most of the iron ore majors retreated in the wake of Tuesday’s 18-month low in spot prices. Fortescue Metals gave up 1.39 per cent, Rio Tinto 1.54 per cent and Champion Iron 3.51 per cent. BHP put on 0.25 per cent.
Z1p Co faded 0.48 per cent despite lifting Australian and New Zealand transaction values by 48 per cent last quarter and revenues by 41 per cent. CEO Larry Diamond told shareholders the company was preparing to enter the Singapore market through a partnership with Singtel Dash, a mobile wallet app, and had signed a deal with a US banking partner.
Other markets
US futures marked time. S&P 500 futures were recently ahead less than a point or 0.01 per cent.
Gold bounced US$11.40 or 0.65 per cent to US$1,775.30 an ounce from last night’s pre-Fed update decline.
