Gains in banks and tech stocks helped lift the share market towards a second day of gains after the nation recorded no locally-acquired cases of Covid-19.
The S&P/ASX 200 reversed to a mid-session tally of 33 points or 0.5 per cent after earlier falling as much as 17 points.
What’s driving the market
Local action mirrored overnight trade in the US, where stocks edged higher amid a rotation out of cyclical sectors into growth stocks as bond yields declined. The S&P 500 crept up 0.23 per cent. Tech stocks and bond proxies led the advance.
The same scenario played out on the ASX: technology and bond proxies up, cyclicals such as energy and materials down. The rally gathered pace after health officials reported there were zero new locally-acquired cases of Covid-19 in the hot spots of NSW, Victoria and Queensland in the last 24 hours.
US futures rallied as investors ignored news President Donald Trump had been impeached in the Democrat-controlled House of Representatives for a second time. S&P 500 futures climbed 11 points or 0.3 per cent amid signs the impeachment would be largely symbolic. Senate Majority Leader Mitch McConnell this morning said it would be impossible for the upper house to give Trump a fair trial before he leaves office on January 20. McConnell noted past Senate impeachment trials have taken between 21 and 83 days.
“US impeachment proceedings do not appear to be having an overwhelming impact on markets,” NAB Director of Economics Tapas Strickland said. “Key for the outlook for stocks will be how quickly the economy rebounds (tied to vaccine rollout and fiscal stimulus hopes), the chances of tax/regulation changes under a Biden Administration, and on whether inflation starts to lift and whether yields lift significantly in response,” he added.
Caution appeared to grip Wall Street this week as traders pondered stretched valuations, rising borrowing costs, inflation fears and concerns a Democrat cash splash may encourage the Federal Reserve to reduce its stimulus program earlier than most market participants expect.
Going up
The technology sector pared a slide that had stripped more than 8.5 per cent from valuations in six sessions. Afterpay accounted for much of the gains, surging 7.5 per cent. WiseTech added 3.6 per cent, NextDC 2.9 per cent and Xero 2.4 per cent.
Bond proxies rallied as cash flowed back from bond markets following last night’s decline in US yields. Transurban added 1.7 per cent, Brambles 1 per cent and Goodman Group 0.5 per cent. Supermarkets Woolworths and Coles put on 1.1 and 0.5 per cent, respectively. CSL edged up 0.7 per cent.
The financial sector was mixed, with a 0.1 per cent drop in CBA outweighed by gains of 2.5 per cent for Westpac, 1.2 per cent for NAB and 1.6 per cent for ANZ.
A sales guidance upgrade lifted Whitehaven Coal 1.4 per cent to a seven-month high. The miner increased the bottom end of its full-year sales outlook to 19 million tonnes from previous guidance of 18.5 million tonnes.
Fund manager Australian Ethical Investment rose 5.6 per cent on news it increased funds under management by 16.9 per cent last quarter to $5.05 billion.
Going down
The materials sector fell to its lowest level in more than a week following a decline in iron ore. Fortescue Metals declined 2.1 per cent, Rio Tinto 1.1 per cent and BHP 0.5 per cent.
Other drags at the top end of the market included Aristocrat Leisure -1.1 per cent and Wesfarmers -0.9 per cent.
Gold stocks mostly retreated as a $10.70 bounce in gold partly unwound this morning. Gold for February delivery was last down $5.80 or 0.3 per cent at US$,1849.10 an ounce. Resolute Mining shed 1.9 per cent and Silver Lake Resources 1.4 per cent. Newcrest reversed early losses to advance 0.2 per cent.
Abacus Property Group sank 4.3 per cent as it traded without its dividend. Premier Investments trimmed yesterday’s 12.7 per cent earnings-driven surge, falling 2.8 per cent.
Other markets
On Asian markets, China’s Shanghai Composite slid 0.4 per cent, Hong Kong’s Hang Seng gained 0.5 per cent and Japan’s Nikkei added almost 1 per cent.
Oil extended its first decline in seven sessions. Brent crude fell four cents or 0.1 per cent to $US56.02 a barrel.
The dollar edged up 0.04 per cent to 77.48 US cents.
Hot today
A seven-year deal in the US worth $40 million sent shares in health imaging company Pro Medicus (ASX:PME) to a 15-month high. The tech company announced its US subsidiary had signed a contract to supply radiology software and services to Intermountain Healthcare, Utah’s largest provider. CEO Dr Sam Hupert said it was the company’s fifth major contract win in six months. Shares that traded below $15 in March jumped 13.2 per cent today to $36.