A week that promised much but delivered little ended on a high note as the share market finally logged a solid gain.
At the end of a week when the market repeatedly vomited up early winnings, the S&P/ASX 200 managed to keep down a rise of 53 points or 0.79 per cent. That was enough for a weekly tally of 56 points or 0.8 per cent.
What moved the market
The market hit its peak for the week on Monday, fell away swiftly later that session and never came close to reclaiming that high. While the Dow notched a string of record finishes, the ASX floundered firmly within a sideways trading band.
Partial explanations for the malaise are plentiful. Turbulence in bond markets, a plunge in iron ore, strains in Chinese equities, worries about Chinese public sector debt, currency factors, speculation a commodities “supercycle” has been overhyped. None fully explain the local market’s under-performance. The Dow has put on 3.1 per cent in four sessions, the broader S&P 500 2.5 per cent.
“Investors seem to be in a growth vs value dilemma,” Kalkine Group CEO Kunal Sawhney said. “Concerns over rising bond yields and inflation expectations have not subsided fully.”
All eleven sectors rallied this session following the latest in a week of strong gains in the US. Tech and energy stocks led the advance with support from the big miners. A retreat in bond yields weighed on the financial sector. CSL was held back by cautious assessments by JP Morgan and Macquarie.
Winners’ circle
The tech sector climbed further away from Tuesday’s six-month low as a decline in bond yields eased pressure on earnings expectations. Xero rose 4.9 per cent, Nearmap 4.8 per cent and Afterpay 2.2 per cent.
Strong overnight rebounds in iron ore and metals lifted the materials sector. Oz Minerals jumped 6 per cent and Mineral Resources 5.4 per cent. BHP put on 2.5 per cent, Fortescue Metals 2.3 per cent and Rio Tinto 0.8 per cent.
Energy was the session’s other standout, climbing 1.5 per cent after Brent crude notched its best close since May 2019. Origin Energy added 3.8 per cent, Beach Energy 1.2 per cent and Woodside 1.4 per cent.
“Oil prices roar to the sound of ringing gas pump counters as according to the US Department of Transportation, more and more folks take the highways ahead of what is likely to be the biggest pent up driving season on record as the US could reach herd immunity from Covid-19 by summer vacation time,” Axi Chief Global Market Strategist Stephen Innes said.
The banks were mixed following a retreat in bond yields. ANZ and CBA crept up less than 0.1 per cent. NAB dipped 0.1 per cent. Westpac shed 0.3 per cent after the Australian Prudential Regulation Authority (APRA) announced it had closed its investigation into possible breaches of anti-money laundering and counter-terrorism laws. APRA Deputy Chair John Lonsdale said the investigation found no breaches of the Banking Act.
Other heavyweight risers included Aristocrat Leisure +1.9 per cent, Wesfarmers +1.2 per cent, Brambles +1.1 per cent and Transurban +1.1 per cent. Supermarkets Woolworths and Coles nudged up 0.8 and 0.3 per cent, respectively.
Breville Group added 0.7 per cent despite news CEO Jim Clayton sold some of his shareholding. Clayton sold 328,338 shares to buy a house and meet tax obligations. He retained a holding of 180,393 and the rights to 427,650 additional shares.
Doghouse
The termination of a broadcasting partnership with Nine Entertainment sent Southern Cross Media down 10.4 per cent to its lowest level in four months. Nine announced it had signed a seven-year deal for WIN Corporation to broadcast Nine’s free-to-air content into Tasmania and parts of regional Australia. The switch ends a five-year partnership with Southern Cross. Nine shares slid 1 per cent.
Travel and tourism stocks were mixed after JP Morgan doused expectations the federal government’s stimulus package will compensate for the end of JobKeeper. The investment bank said airlines would see most of the benefit, with travel agents seeing a much smaller share of the cake. Flight Centre retreated 4.1 per cent and Helloworld Travel 3.7 per cent. Webjet and Qantas finished flat. Sydney Airport gained 2.4 per cent.
Gold stocks came under mild pressure following two days of gains. Regis Resources fell 4.5 per cent, Northern Star 4.2 per cent, Silver Lake Resources 3.4 per cent and Newcrest 1.6 per cent.
CSL shed 0.25 per cent. Tassal Group dropped 3.7 per cent as it traded without its dividend.
Other markets
Positive US futures helped the market overcome a brief mid-morning wobble. The index temporarily gave up around 30 points before reversing higher. S&P 500 futures were lately up eight points or 0.2 per cent.
A mixed afternoon across Asian markets saw the Asia Dow advance 0.91 per cent, China’s Shanghai Composite add 0.38 per cent and Japan’s Nikkei 1.76 per cent. Hong Kong’s Hang Seng dropped 0.25 per cent
Brent crude fell 12 cents or 0.2 per cent to US$69.51 a barrel. Gold faded $5.60 or 0.3 per cent to US$1,716.90 an ounce.
The dollar gave up early gains, easing back to trade flat at 77.85 US cents.