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A fierce final-day rally helped the share market eke out a fourth straight quarterly advance despite a challenging September.
The S&P/ASX 200 soared 136 points or 1.88 per cent today to a slim quarterly gain of 19 points or a little over 0.2 per cent.
The end-of-quarter rally preserved a winning streak that stretches back to last September. The advance reduced this month’s loss to 203 points or 2.7 per cent.
What moved the market
The ASX rebounded from two days of heavy selling as bonus-hungry institutional investors put the best possible gloss on a difficult quarter. The last session of the month/quarter often witnesses extreme moves seemingly disconnected from market fundamentals. Today the ASX 200 recouped more than half of this week’s losses despite weak leads from the US.
“Quarter-end dynamics seem to be weighing on investors’ minds, offering a helping hand to the share market.” Kalkine Group CEO Kunal Sawhney said.
“The quarter-end trade is usually tempting for fund managers, who ‘window dress’ the portfolio to boost the appearance of the fund’s performance at the end of each quarter. There is considerable historical evidence of portfolio pumping at the end of quarter, which potentially inflates the fund’s closing net asset value.”
The rally gathered pace after the US Senate struck a deal to avoid a government shutdown. Majority Leader Chuck Schumer announced the Senate had reached a stop-gap deal to fund government operations to December 3. Senators will vote tonight. S&P 500 futures firmed 30 points or 0.7 per cent.
“We can approve this measure quickly and send it to the House so it can reach the president’s desk before funding expires midnight tomorrow,” Schumer said. “With so many critical issues to address, the last thing the American people need right now is a government shutdown.”
The Australian market built steadily through the first half of the quarter, then wilted as the delta Covid variant pushed much of the country into lockdown. The ASX 200 peaked at a record 7632.8 on August 13 and has since fallen almost 300 points.
Covid continues to cast a cloud over the economic outlook, here and overseas. Victoria reported a record 1,438 new cases this morning, a major leap a day after reporting 950 cases. In China, factory activity contracted for the first time since February 2020. The CFLP manufacturing PMI dropped to 49.6 this month from 50.1 last month. Readings below 50 indicate declining activity. Chinese growth has been impacted by sporadic lockdowns as the government pursues a zero-Covid strategy.
The dollar dipped below 72 US cents overnight as investors favoured the perceived security of the greenback. The Aussie rebounded 0.36 per cent during Australian trading hours to 72.05 US cents.
“The risk-sensitive Australian dollar has broadly remained in a weak stance against the greenback over the recent days,” Kalkine’s Mr Sawhney said. “The spread of the coronavirus Delta variant and fresh lockdowns in different parts of Australia has been keeping the currency under pressure.”
US stocks steadied overnight but finished off session highs as jitters over inflation, long-term interest rates and the US federal debt limit persisted. The S&P 500 edged up 0.16 per cent. The Dow gained 0.26 per cent, while the Nasdaq dropped 0.24 per cent.
Winners’ circle
All 11 sectors found buyers. Defensive sectors featured at both extremes. Gains ranged from a slender 0.27 per cent for utilities to 2.67 per cent for the consumer staples sector.
The heavyweight miners led the charge as iron ore spiked more than 10 per cent today in anticipation of buyers stocking up ahead of Golden Week holidays. Rio Tinto put on 3.4 per cent and BHP 3.35 per cent.
Fortescue Metals trailled its rivals after suspending operations at its Solomon Hub following a “significant incident” involving an employee this morning. An investigation was underway. The miner’s shares finished 1.08 per cent ahead.
Banks and supermarkets offered support as the yield on long-term bonds eased from three-month highs. Westpac jumped 3.3 per cent, Woolworths 2.8 per cent, ANZ 2.4 per cent, NAB 2.17 per cent, Coles 2.16 per cent and CBA 1.67 per cent.
Wesfarmers rose 0.8 per cent after its Bunnings subsidiary cleared a regulatory hurdle to purchasing specialist tile retailer Beaumont Tiles. The competition regulator, the ACCC, said it would not oppose the acquisition. The regulator said Bunnings was not a major player in tile sales and the acquisition would not significantly reduce competition.
A web browser deal with Microsoft lifted Z1p Co 1.29 per cent. The Australian company will integrate its buy now pay later offering into Microsoft’s Edge browser. The company said its digital payment option could launch on Edge in the US as soon as November.
South32 firmed 4.13 per cent after increasing its stake in Mozambique’s Mozal Aluminium to 72.1 per cent. The diversified miner will acquire Mitsubishi’s 25 per cent stake in the smelter for US$250 million. The purchase will increase South32’s share of aluminium production by 15 per cent.
Explosives manufacturer Orica jumped 14.53 per cent following a broker upgrade in the wake of yesterday’s well-received market update. The company said ammonium nitrate sales volumes had improved in the second half.
Doghouse
Losers were scarce during a bullish session. Fewer than one in ten companies declined on the ASX 200. The biggest drags were Pinnacle Investments -3.5 per cent, AusNet -1.56 per cent and AGL Energy -1.53 per cent.
Gold stocks featured among the declines after the yellow metal sank to its lowest since late March. St Barbara shed 1.11 per cent, Gold Road Resources 0.83 per cent and Regis 0.5 per cent.
Other markets
The ASX was something of an outlier during a generally negative session on Asian markets. The Asia Dow shed 0.06 per cent, Hong Kong’s Hang Seng 0.6 per cent and Japan’s Nikkei 0.06 per cent. China’s Shanghai Composite gained 0.81 per cent.
Oil drifted lower following the first decline in US crude stockpiles in eight weeks. Brent crude eased 31 US cents or 0.4 per cent to US$77.78 a barrel.
Gold rebounded US$9 or 0.5 per cent to US$1,731.90 an ounce.
