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The Australian share market logged a nine-month high before losing momentum ahead of inflation data and a public holiday later this week.

The S&P/ASX 200 touched 7472.8, a level last seen in April, before trimming its rise mid-session to three points or 0.04 per cent.

Gains in tech stocks, lithium miners and energy producers were largely offset by declines in bulk metal miners and consumer stocks.

What’s driving the market

The market’s three-week winning run showed hints of fatigue as investors sniffed at Wall Street’s best session in two weeks. The S&P 500 jumped 1.89 per cent on Friday to its first gain in four sessions.

Growth sectors outperformed value peers. The Nasdaq Composite jumped 2.66 per cent, versus a 1 per cent rise in the value-driven blue chips of the Dow.

“U.S. equity markets snapped a three-day losing streak on Friday, supported by a rebound in tech stocks, many of which are set to report earnings over the next fortnight,” Tony Sycamore, market analyst at IG, said.

The ASX 200’s run of weekly advances is the longest since a similar streak from mid-October to early November. The index’s tally for the year reached 5.9 per cent on Friday, bringing the benchmark within 2.4 per cent of its 2021 all-time high.

Progress this week will be hampered by public holidays in China and Australia. Trade in Shanghai is suspended all week for Lunar New Year. Hong Kong is closed until Thursday. The ASX shuts on the 26th for Australia Day.

The local market also faces a potential hurdle in Wednesday’s quarterly inflation report. Much of this year’s rally has been built on the conviction inflationary pressures are set to abate, relieving pressure on the Reserve Bank to keep hiking official rates. However, last month’s unexpectedly hot consumer price index raises the possibility of a negative surprise.

“Australia’s headline CPI growth likely peaked in the December quarter with a 7.8% quarter-on-quarter rise, following 7.3% in the third stanza,” Moody’s economics team wrote.   

“We expect the RBA will forge ahead with a further 25-basis point hike in February, that would bring the cash rate to 3.35% and total cumulative tightening since May 2022 to 3.25%,” they added.

Going up

Tech and battery metal miners filled most of the slots at the top of the index. Last week’s best performer, lithium miner Pilbara Minerals, rallied 6.15 per cent. Afterpay’s parent company, Block, surfed positive Nasdaq sentiment to a gain of 6.08 per cent.

Novonix advanced 6.73 per cent, Liontown Resources 4.36 per cent and Core Lithium 3.79 per cent.

Gas producer Karoon Energy popped 6.15 per cent after upgrading reserves at its Santos Basin concession in Brazil by 23 per cent. Recent production data indicated producing wells were performing better than expected.

South32 rallied 1.53 per cent following a 12 per cent increase in first-half copper production as costs remained in line with or below full-year guidance. Aluminium production increased 15 per cent. A record half for Australian manganese generated an increase of 7 per cent in total manganese production.

A second straight month of profitability lifted BNPL player Sezzle 17.43 per cent to a four-month high. Net income of US$1.8 million last month helped the firm swing from a net loss of US$25.9 million in Q421 to net income of US$0.5 million last quarter.

“In 2022, we set out on a mission to become profitable by year end,” Charlie Youakim, Sezzle’s Chairman and CEO, said. “We are excited, as we have shown investors that we are clearly on the path to profitability with a well-capitalized balance sheet that does not require additional capital,” he added.

Mining tech provider Imdex rose 2.2 per cent to $2.485 after raising $185 million from institutional investors at $2.20. Funds raised will be used to acquire Norway’s Devico AS, a specialist in directional drilling tech and advanced sensors.  

Going down

The mining majors fell ahead of an anticipated slowdown in demand as China closes for a week-long holiday. BHP shed 0.62 per cent, Rio Tinto 0.1 per cent and Fortescue Metals 0.73 per cent.

The major banks turned mixed after Macquarie downgraded the sector to “Underweight”. Macquarie analysts said they saw “downside risk to earnings” as inflation and higher rates undermine asset values and increase impairments.

Westpac eased 0.5 per cent. NAB dipped 0.06 per cent. CBA edged up 0.05 per cent and ANZ 0.48 per cent. Other heavyweight drags included Wesfarmers -1.01 per cent, Coles -0.73 per cent and Telstra -0.61 per cent.

Ramelius Resources dropped 0.23 per cent after a blowout in costs forced the gold miner to defer plans to extend open pit mining at its Edna May operation. The deferment will not affect the firm’s production outlook.

“Well publicised cost increases across the WA mining sector have eroded the returns on the Stage 3 Open Pit project to the point where they simply do not meet our internal hurdles,” Managing Director Mark Zeptner said.

Coal miner Stanmore Resources hit a record before fading after meeting second-half production guidance. The result was boosted by record run of mine production at the Isaac Plains Complex through October and November. The share price hit an all-time high at $3.755 before easing 6.56 per cent to $3.42.

Financial services provider Sequoia slumped 13.93 per cent after warning first-half earnings would fall 40 per cent short of budget. The group attributed the miss to “a number of one-off issues” and said it expected to make up “a significant amount” of the profit shortfall this half.

BNPL junior Laybuy entered a trading halt pending an announcement regarding plans to delist. The firm’s disastrous run on the boards looked set to end after shares that listed at $1.41 in 2020 traded recently at six cents, a loss for initial investors of more than 95 per cent. The dramatic decline came as a bubble in buy now, pay later stocks deflated.  

Other markets

With many Asian markets closed for Lunar New Year holidays, the Asia Dow gained 0.83 per cent and Japan’s Nikkei put on 1.15 per cent.

S&P 500 futures retreated three points or 0.08 per cent.

Oil trimmed last week’s 2.8 per cent advance. Brent crude reversed 40 US cents or 0.46 per cent to US$87.23 a barrel.

Gold climbed US$4.30 or 0.2 per cent to US$1,932.50 an ounce.

The dollar firmed 0.11 per cent to 69.91 US cents.

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