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Bank and consumer stocks helped drive the Australian market to an eight-and-a-half month high as the exchange operator battled fresh technical problems.

The S&P/ASX 200 shrugged off weak overnight leads, rising 30 points or 0.5 per cent by mid-session.  

What’s driving the market

A resilient local market made light work of soft leads from Wall Street. Fuelled by vaccine optimism, extraordinary stimulus measures and low virus rates, Australian shares have put on more than 10 per cent this month. A final tally around that level would represent the market’s best monthly percentage return since March 1988, according to CommSec.

Such is the momentum that investors paid scant heed to overnight losses in the US. The S&P 500 retreated 0.48 per cent after disappointing retail sales and fresh virus restrictions gave investors an excuse to lock in profits at record levels. The Dow Jones Industrial Average dropped 167 points or 0.56 per cent.

ASX shares shrugged off early weakness, rising 0.3 per cent as the exchange operator continued to battle problems with its new trading system. Two days after a technical glitch halted trade less than half an hour into the session, the ASX suspended a service used by brokers and full-time retail traders.

“ASX believes it is prudent to suspend the Centre Point service – ASX’s dark pool matching system – for today, following the issues experienced yesterday creating a national best bid and offer,” the company said. “This will allow ASX to implement a fix to the service, and ensure a safe and stable market environment.”

Going up

Bank stocks led the rally after news of a sharp improvement in loan repayments soothed fears lenders faced a tsunami of bad debts. The Australian Banking Association said the number of deferred loans had fallen by 70 per cent from more than 900,000 at the pandemic peak to below 300,000.  

“This is an encouraging sign that most Australians are through the worst”, Australian Banking Association CEO, Anna Bligh, said.

ANZ, CBA and NAB climbed to their highest point since March. ANZ gained 1.2 per cent, CBA 2.3 per cent and NAB 2.3 per cent. Westpac advanced 1.8 per cent to a five-month high.

A well-received, Covid-affected full-year result from Aristocrat Leisure helped lift the consumer discretionary sector. Recognition of a $1.1 billion deferred tax asset bumped the poker machine-maker’s net profit up to $1.497 billion. The share price improved 2.9 per cent. Elsewhere in the sector, Wesfarmers rose 1.3 per cent, Domino’s Pizza 0.8 per cent and Star Entertainment 0.8 per cent.

Other index heavyweights to make gains included toll road operator Transurban +1.1 per cent, supermarket Coles +1.1 per cent, goldminer Newcrest +0.5 per cent and health giant CSL +0.8 per cent.

United Malt hit a seven-month peak after the brewery supplier said it was well positioned for a pick-up in demand when the pandemic passes. Shares rose 3 per cent on news the Graincorp spin-off will pay a dividend of 3.9 cents after declaring an underlying full-year net profit after tax of $57.4 million.

Downer EDI put on 0.9 per cent after selling its blasting services business to a Chilean company for $62 million.

Going down

Resource stocks were the biggest drag on the index following a mixed night on commodity markets. BHP retraced 0.6 per cent and Rio Tinto 0.5 per cent. Fortescue Metals rose 0.2 per cent.

Woodside was an outlier during a generally soft session for energy stocks, rising 0.7 per cent. Oil Search declined 2.6 per cent and Santos 1 per cent.

Other heavyweights to lose ground included Macquarie Group -0.6 per cent, Telstra -0.3 per cent and Goodman Group -0.1 per cent.

A warning of a challenging first quarter helped drag ALS shares down 2.9 per cent. The analytical testing business announced half-year revenues took an 8.7 per cent hit from Covid.

Other markets

Weak US index futures kept a lid on gains. S&P 500 index futures faded eight points or 0.2 per cent.

A negative morning on Asian markets saw China’s Shanghai Composite fall 0.2 per cent, Hong Kong’s Hang Seng 0.1 per cent and Japan’s Nikkei 0.8 per cent.

Brent crude eased six cents or 0.1 per cent to $US43.69 a barrel. Gold declined $8 or 0.4 per cent to $US1,877.10 an ounce.

The dollar slid 0.24 per cent to 72.78 US cents.

What’s hot today and what’s not

Hot today: Shares in anti-cancer drug developer Kazia Therapeutics (ASX:KZA) have doubled in two weeks. The company today released fresh data confirming the safety and efficacy of its treatment for brain tumours. Its paxalisib molecule inhibitor outperformed the existing standard treatment in a phase II trial. Shares that traded for 80 cents earlier this month bolted 35.3 per cent this morning to $161.

Not today: Milk company A2M (ASX:A2M) fell 3.8 per cent after Covid disruption to its corporate diagou reseller channel raised doubts over profit guidance. The company reaffirmed guidance issued in September but noted uncertainties related to the pandemic. CEO Geoffrey Babidge said prior forecasts depended heavily on a significant increase in second-half revenues and growth in Chinese demand.

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